IS has successfully recruited young men from local tribes, offering them protection and benefits but it has also enlisted military officers from the former regime of Muammar Gaddafi, said the report by the panel of experts who report to a UN sanctions committee.
IS jihadists have cemented their hold on the coastal city of Sirte, wiping out opposition and the group is "currently the most significant political and military actor in the region," said the report which was submitted to the council on Wednesday.
Extremists from sub-Saharan Africa have traveled through Sudan to join IS ranks in Sirte and Benghazi, the report said, confirming fears that the Libyan IS branch is seeking to draw recruits from other parts of the continent.
"The political and security vacuum has been further exploited by Islamic State in Iraq and the Levant, which has significantly expanded its control over territory," the report said.
The report did not provide estimates of the number of IS fighters in Libya.
The country has been under an arms embargo since then, but the report cited a recent transfer of MIG-21F jets to Tobruk, where the internationally recognized government is based.
The jets "appear to be consistent with those owned by Egypt," the experts said. Cairo, however, told the panel its information on the transfer was "incorrect."
The panel is continuing to investigate claims that Turkey, the United Arab Emirates and Sudan have also violated the embargo.
"The continuation of armed clashes and the expansion of ISIL have led to an increase in demand for military materiel," said the report, which cited a "revival of external support" for the various factions.
"The rise of ISIL in Libya is likely to increase the level of international and regional interference, which could provoke further polarization if not coordinated," said the report.
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