The United States will officially re-open its embassy in Tripoli this week, nearly seven months after it was shuttered as fighting in the country intensified and just hours before the US-imposed sanctions on the Gadhafi regime.  President Obama announced this morning that the ambassador to Libya, Gene Cretz, is on his way back to Tripoli.

A State Department official tells ABC News that Cretz has already departed and will arrive in Tripoli on Wednesday. The official said the embassy will raise its flag in a ceremony on Thursday at a temporary location since the U.S. embassy compound was ransacked and burned by a mob of Gadhafi loyalists in May. Officials say the State Department is still evaluating whether the old embassy building can be salvaged.

Speaking at a meeting of the Libya Contact Group at the United Nations, shortly after the new Libyan flag was raised at the world body, President Obama praised the Libyan rebels for their fight against longtime dictator Moammar Gadhafi, who has fled the capital but has yet to be found.

“Make no mistake, credit for the liberation of Libya belongs to the people of Libya,” President Obama said.

He also warned any forces still loyal to Gadhafi that they should give up the fight.

“Those still holding out must understand—the old regime is over, and it is time to lay down your arms and join the new Libya,” he said.

Obama credited the international community for its support during the conflict, which included a UN-authorized NATO bombing campaign that targeted Gadhafi’s tank columns as they advanced on the rebel stronghold of Benghazi, turning the tide of the conflict.

“When the civilians of Benghazi were threatened with a massacre, we exercised that authority.  Our international coalition stopped the regime in its tracks, saved countless lives, and gave the Libyan people the time and space to prevail,” Obama said.

Critics of the NATO campaign, including members of both parties on Capitol Hill, said the NATO effort went beyond its mandate and took sides in the conflict by essentially providing air support for rebel forces.  The Obama administration was initially reluctant to get involved in the Libyan conflict, but provided the bulk of the firepower to take out Gadhafi’s air defenses in the early days of NATO involvement as it worked to establish a no-fly zone. Within days, however, the US transitioned to a critical support capacity and allowed European countries to take over the majority of bombing missions.

President Obama today praised that arrangement.

“This is how the international community should work in the 21st century–more nations bearing the responsibility and costs of meeting global challenges,” he said.

“Libya is a lesson in what the international community can achieve when we stand together as one.  We cannot and should not intervene every time there’s an injustice in the world.  Yet it’s also true that at times the world could have and should have summoned the will to prevent the killing of innocents on a horrific scale.  And we are forever haunted by the atrocities we did not prevent, the lives we did not save.  But this time was different.  This time, we found the courage and the collective will to act,” the president added.

Obama also pledged the United States’ commitment to a new Libya, including humanitarian efforts now that the bulk of the fighting has ended. He urged the new Libyan leadership to adhere to democratic principles and to ensure Libya’s extensive oil reserves are not exploited by a connected few.

“As sanctions are lifted, as the United States and the international community unfreeze more Libyan assets, and as the country’s oil production is restored, the Libyan people deserve a government that is transparent and accountable,” he said.