Italy's Selex will help set up a satellite-based surveillance system to monitor Libya’s borders with its sub-Saharan neighbours, which will be "sealed" from December.
The government has allocated an extra LD21.6m ($17.3m) for army salaries, a sum which will be deducted from other parts of the budget.
Fighting between the Libyan army and Islamist militant group Ansar al-Sharia has killed nine people and injured 49, according to state news agency LANA.
Some LD2m ($1.6m) has been allocated to install security checkpoints and CCTV cameras around Libya’s second city, says the council.
A number of General National Congress (GNC) members say the government approved a decision to allocate LD900m ($720m) towards funding the group.
Canada is bringing its rules on the export of non-lethal military equipment to Libya in line with a UN resolution approved earlier this year.
The UK is set to train 2,000 former Libyan fighters who have since joined the national army.
US-based Boeing says Libya is one of several North African countries interested in buying its Chinook helicopters.
A spokesman says the ministry intends to sign agreements with "a number of foreign companies" to improve border security, and says several UK firms recently made a presentation to the defence minister.
The Ministry of Defence says it intends to honour pre-2011 contracts at the “earliest opportunity”, according to reports.
Defence minister Abdullah al-Thanay recently met a representative of the US group.
Libya’s interim government has announced plans to raise the wages of army personnel, including civilian workers, by 20-30%.
Abdullah al-Thani, who replaces Mustafa al-Barghati, has been officially sworn in by the General National Congress (GNC).
A cabinet meeting on 17 July approved an increase in salaries for members of the armed forces.
Mohamed al-Barghati - who already tried to submit his resignation two months ago - has been asked to step down after fighting in Tripoli left at least seven people dead.