Libyan troops forced rebels to retreat overnight from the outskirts of the oil town of Ras Lanuf, pushing the front line eastwards, but the rebel council's chief said more volunteers were ready to fight.
The front line now stands between the rebel-held town of Uqaylah and Ras Lanuf, where oil storage tanks were hit during yesterday's fighting. Rebels blamed an air strike, but the government denied hitting the oil plant. Rebels said there were more fighters standing by.
"The volunteers now at the front are less than 30 per cent of the people who are willing to go and fight, our people are ready and determined to fight Gadafy's forces," Libyan National Council chief Mustafa Abdel Jalil told Reuters in an interview.
It was clear the rebels had retreated from Ras Lanuf, but with a rapidly moving battlefield, just how far was uncertain.
"We're out of Ras Lanuf. They've beaten us back with bombardment," rebel Col Bashir Abdul Qadr told Reuters. "We've moved back 20km from last night because we are also afraid the refinery will explode."
Rebels, armed mainly with anti-aircraft and anti-tank guns, rocket propelled grenade launchers and light weapons, fought back to hold Ras Lanuf, about 590km east of Tripoli, but were overwhelmed by the firepower of Col Gadafy's forces.
The next big oil town of Brega was alive with rumour that Col Gadafy's forces would be advancing shortly, mounting another overwhelming show of military force. On the outskirts, rebels made preparations in armed vehicles to defend the town.
Elsewhere, the last rebel holdout in western Libya is being attacked by government forces today, with signs rebels' morale is faltering after they were defeated or forced to retreat in other parts of the country.
The city of Misrata, about 200km east of Tripoli and with a population of around 300,000, has been mostly calm since rebels repelled a major attack by forces loyal to Muammar Gadafy last weekend.
However, rebels in Misrata today said Gadafy forces had begun an attack on the town.
Zawiyah, the only other town in western Libya where the rebels had openly defied Col Gadafy's rule, was recaptured this week, with the government taking foreign journalists for a visit there yesterday to showcase its victory.
Libyan officials say the rebels are gangsters and al-Qaeda operatives and they have used the minimum force necessary to dislodge them from towns.
The insurgents say they feel increasingly abandoned by world powers who have stepped up diplomatic pressure on Col Gadafy to quit but stopped short of endorsing air strikes, a no-fly zone or other military-backed means to achieve that goal.
Libyan rebels said their three-week-old insurrection could fail without a no-fly zone.
Reuters