* Medicine is biggest concern
* Feuding factions undermine humanitarian efforts
* Displaced, migrants compound challenges (Adds more material from interview)
By Michael Georgy
CAIRO, Feb 23 (Reuters) - Libya faces severe shortages of life-saving medicine and about one million people will soon be in dire need of help, a U.N. humanitarian official warned, as warring factions hamper efforts to end chaos and form a unity government.
"Our estimation is that by the end of march, Libya may run out of life saving medications which will impact about one million people." said Ali Al-Za'tari, the United Nations humanitarian coordinator for the North African country.
"If there is no medication and medical supplies coming in that will be a real issue for Libya."
Al-Za'tari was due to meet Arab League delegates on a visit to Cairo to try and win support for U.N. efforts to ease what he calls a humanitarian crisis in Libya.
His main concern at this point is scarcity of medicine needed to combat diseases like cancer, and the state of hospitals in Libya, which has descended into anarchy since the uprising that toppled Muammar Gaddafi five years ago.
Compounding the many problems are about 435,000 internally displaced people living in schools and other public places and some 250,000 migrants and refugees who had hoped to pass through Libya and find a better life abroad.
Since 2014, Libya has had two competing governments, one based in Tripoli and the other in the east, both of which are backed by loose alliances of armed brigades and former rebels.
STRUGGLE TO FORM A GOVERNMENT
The U.N. plan under which the unity government has been named was designed to help Libya stabilise and tackle a growing threat from Islamic State militants. It has been opposed by hard-liners on both sides from the start and suffered delays.
Instability has taken a heavy toll on healthcare facilities. In Benghazi, for instance, only one or two out of about a dozen hospitals are functioning, said Al-Za'tari.
A few days ago, he was notified that the psychiatric care hospital in Benghazi has no resources. Scores of patients lack proper care.
"It is really difficult for a hospital to continue like this in a town that is witnessing constant daily fighting in certain parts," he told Reuters in an interview.
Al-Za'tari said 1.3 million people in Libya need humanitarian assistance.
"Today we are receiving requests from NGOs for food. That is not a good sign. It means you have a sizeable portion of the community requiring food intake that is stable food intake," said Al-Za'tari.
Focusing attention on their plight will be difficult in a region with multiple crises, from Syria to Iraq to Yemen.
"The perception is Libya is rich and can fend for itself. Libya is rich but it can't fend for itself today," said Al-Za'tari, in reference to Libya's status as an oil producer
"It is not an easy story to sell and I admit it. I am living it. Telling people that Libya has a humanitarian situation makes them go back in their seats and say 'no way'."
(editing by Janet McBride)