The Libyan army staged a prolonged artillery barrage on the city of Zawiyah, west of Tripoli, on Thursday, with residents saying more than 30 people have been killed. Among the dead was the town's rebel commander.
The rebellion in Zawiyah -- the closest rebel-held territory to the capital and also the site of an oil refinery -- has been an embarrassment to the authorities who are trying to show they control at least the west of the country.
"There has been heavy shelling of Zawiyah by (Muammar) Gadhafi's forces and we are hearing of many casualties," Mustafa Gheriani, a spokesman for the rebel February 17th Coalition, said.
Libya hopes to regain control of rebel-held Zawiyah "possibly tonight", Libyan government spokesman Mussa Ibrahim said on Friday.
"We believe Zawiyah will be under full government control possibly tonight," he said. Asked about Libyan TV reports that Zawiyah, some 50 km from the capital Tripoli, was in the hands of government forces, he said: "Not totally, but almost."
An improvised force of rebels has been pushed back to the central square in Zawiyah, where about 2,000 of them are getting ready to make a last stand, a rebel spokesman said.
"We are on the square, all of our forces are here," said Youssef Shagan. "The square is safe but they (government forces) are attacking from east and west. We will fight until the end."
Muammar Gadhafi's forces battled rebels on several fronts in a worsening of Libya's crisis on Friday and unrest erupted in the capital when gunmen fired to break up crowds shouting "Gadhafi is the enemy of God".
Paris-based Interpol delivered a global alert against Gadhafi and 15 members of his inner circle to help police around the world enforce United Nations sanctions aimed at ending turmoil in the world's 12th largest oil exporter.
Vowing "victory or death", eastern-based rebels pressed home a westwards push towards Gadhafi's Tripoli stronghold with an attack on the oil town of Ras Lanuf, which lies on a strategic coastal road, claiming to have taken its airport.
Eastern regions of the country, around the city of Benghazi, have already spun out of Gadhafi's control after a popular revolt against his four decades of rule. The rebels' grip on the coastal highway appears to be strengthening, although on Friday, there were reports that Gadhafi forces bombed an arms depot on the outskirts of Bengahzi.
The uprising against Gadhafi, the bloodiest yet against a long-serving ruler in the Arab world, has knocked out nearly 50 percent of the OPEC-member's 1.6 million barrels of oil per day output, the bedrock of its economy.
The upheaval is causing a humanitarian crisis, especially on the Tunisian border where tens of thousands of foreign workers have fled to safety. But an organized international airlift started to relieve the human flood from Libya as word spread to refugees that planes were taking them home.
The rebels earlier told Reuters they were open to talks only on Gadhafi's exile or resignation following attacks on civilians that have provoked international condemnation, a raft of arms and economic sanctions and a war crimes probe.
"Victory or death ... We will not stop until we liberate all this country," Mustafa Abdel Jalil, head of the rebel National Libyan Council told supporters of the two-week-old uprising.
In Tripoli, shooting rang out across Tajoura district as Gadhafi loyalists broke up a crowd of protesters seeking an end to his long rule and shouting "Gadhafi is the enemy of God!"
The demonstrators spilled out of the Murat Adha mosque after Friday prayers, and several hundred of them began chanting for an end to Gadhafi's four decades in power.
"This is the end for Gadhafi. It's over. Forty years of crimes are over," said Faragha Salim, an engineer at the protest in Tajoura.
Up to 100 people in Tripoli had been arrested, accused of helping the rebels, Al Jazeera said.