Libyan forces failed to convince Muammar Gadafy loyalists today to give up one of their last strongholds without a fight, raising the prospect of an assault on the town of Bani Walid.
Outside the desert town, a National Transitional Council (NTC) negotiator said talks were over.
"As chief negotiator, I have nothing to offer right now. From my side, negotiations are finished," Abdallah Kanshil, a negotiator for the interim council said at a checkpoint some 60km outside Bani Walid.
"We will leave this for the field commanders to decide, for the NTC to decide what to do next. I urge Gadafy people to leave the town alone."
He said all NTC proposals put forward today were rejected. "They said they don't want to talk, they are threatening everyone who moves. They are putting snipers on high rise builtings and inside olive groves, they have a big fire force. We compromised a lot at the last minute," he said.
Earlier, tribal elders from the besieged town arrived at the frontline checkpoint. Sitting in the shade of a building, the men, dressed in flowing white robes, and NTC negotiators in military fatigues and with rifles slung over their shoulders huddled in conversation.
"We do not want to solve this militarily," NTC negotiator Abusif Ghnyah told Reuters at the frontline. "We don't want to fire even a single shot. We don't want blood."
There has been speculation from NTC officials that members of the Gadafy family, even the former Libyan leader himself, may be hiding in the town.
NTC commanders at the checkpoint said they suspected Gadafy's most politically-prominent son, Saif al-Islam, may have fled the town yesterday and headed deeper into the southern desert.
Mr Ghnyah said that about 20 pro-Gadafy fighters still controlled the centre of Bani Walid, though other NTC officials estimated there may be as many as 100 fighters waiting in the town.
Bani Walid, along with Gadafy's hometown of Sirte and Sabha, deep in the Sahara desert, are three of the last main areas not under NTC control, though its forces are massed nearby.
Independent accounts from inside the towns have not been available as communications appear to be largely cut off.