* Ministries to be blocked until government quits -gunmen
* Law banning ex-Gaddafi officials could cripple government
* Army chief could also resign on Tuesday - PM source (Adds quotes from gunmen, prime minister's office)
By Ghaith Shennib
TRIPOLI, May 7 (Reuters) - Libya's defence minister resigned on Tuesday in protest at a siege by gunmen of two government ministries, a stark sign of the young democracy's weakness two years after the revolution that overthrew dictator Muammar Gaddafi.
Armed groups have refused to disperse even after parliament buckled on Sunday to their main demand by banning from government posts any senior official who served under Gaddafi.
The law could embolden armed groups in the oil-producing North African state to flex their muscle further and, if fully implemented, oust so many senior officials, including the premier, that an already shaky transitional government could be rendered dysfunctional.
In becoming the first cabinet minister to quit in frustration over the crisis, Defence Minister Mohammed al-Bargathi said: "I will never be able to accept that politics can be practiced by the power of weapons ... This is an assault against the democracy I have sworn to protect."
His declaration was accompanied by local media reports that the army chief of staff and other ministers had also stepped down. But a source at the prime minister's office said notice of Bargathi's resignation was the only one they had received.
The source, however, said that it was possible the army chief would resign later on Tuesday, as he was meeting the prime minister to make an "important decision".
Members of parliament say the new legislation could be applied to around 40 of 200 deputies and could also unseat Prime Minister Ali Zeidan, who some protesters demand should quit immediately.
"Our demand was, from the beginning, for the General National Congress (parliament) to withdraw its confidence from the government," said Wissam Bin Majid, a leader of one of the armed groups at the Foreign Ministry.
"It does not matter whether the political isolation law is implemented after a month or a year, this government must step down now."
Diplomats said that in agreeing to vote under duress from the streets, parliament may have effectively strengthened armed groups who were instrumental in overthrowing Gaddafi and now cut a higher profile than state security forces.
The sweeping terms of the vote could impair the Tripoli government and has been compared by analysts to Iraq's campaign to bar former members of late dictator Saddam Hussein's Ba'ath Party from public service.
On Monday a spokesman for the Libyan parliament conceded that it was beyond the government's capability to end the siege of the foreign and justice ministries and that it would be up to the militiamen now to leave as promised.
The cabinet and Libya's official armed forces are so flimsy that big swathes of the vast, thinly populated desert country have been beyond central government control since Gaddafi's grip unravelled during the 2011 uprising against him. (Additional reporting and writing by Jessica Donati; Editing by Mark Heinrich)
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