Sustained gunfire has erupted in the centre of Libya's capital, Tripoli, an area that has so far been relatively free of violence.
It was unclear who was carrying out the shooting, which started at about 5:45am (0345 GMT) on Sunday, or what caused it, Anita McNaught, Al Jazeera's correspondent in the capital, said.
Automatic weapon rounds, some of it heavy calibre, echoed around central Tripoli along with pro-government chants and whistling and a cacophony of car horns as vehicles sped through the vicinity, witnesses said.
However, a government spokesman denied any fighting was under way in Tripoli. "I assure you, I assure you, I assure you, I assure you, there is no fighting going on in Tripoli," Mussa Ibrahim told the Reuters news agency.
"Everything is safe. Tripoli is 100 per cent under control. What you are hearing is celebratory fireworks. People are in the streets, dancing in the square."
Our correspondent, reporting from Green Square in Tripoli, said that thousands of people had turned out to show their support to Libyan leader Muammar Gaddafi.
“The square is absolutely thronged with supporters of Gaddafi,” McNaught said, adding that there was music playing and people firing guns in the air to celebrate the Libyan leader’s claimed tactical advances.
The Libyan government later announced widespread tax cuts to mark what it called "victory" over the rebels.
Tripoli is the main stronghold of Gaddafi, who is facing a sustained rebellion that has posed the biggest challenge ever to his more than 41-year-old rule.

Conflicting reports

Libyan state television said the shots were in celebration of Gaddafi forces having reclaimed the cities of Misurata and Az-Zawiyah, which lies just 50km west of Tripoli, a day after anti-government fighters repelled repeated attacks by forces loyal to Gaddafi.
However, residents of Misurata told Al Jazeera that reports the city had been recaptured were false.
"There's absolutely no grounds for that claim whatsoever," Sadoun Mistrai, one resident, said.
However, since then residents said government tanks had begun shelling the town.
"Misurata is currently under attack," a resident told Al Jazeera.
"There are ground attacks from supporters of Gaddafi and some mercenaries. I hear a lot of gunfire; I suspect there will be a lot of casualties," he said.
Meanwhile, the Associated Press news agency reported that Libyan warplanes had launched air strikes on an anti-Gaddafi force advancing towards the city of Sirte, a Gaddafi stronghold.
An AP television crew saw the air strikes targeting the anti-Gaddafi forces on Sunday, the news agency reported.
State TV meanwhile showed pictures of tanks, armoured-personnel carriers and other weapons it said were seized on Saturday from rebels in Az-Zawiyah.
But witnesses told Al Jazeera rebel forces there were able to repel heavy government assaults on their positions on Saturday when Gaddafi's forces encircled the city.
More than 30 people were killed and as many as 200 people were said to have been wounded in the fighting that drove government forces out of the town.
Youssef Shagan, a spokesman for the fighters in the town, said that Gaddafi's forces had entered Az-Zawiyah at 6am (04:00 GMT) with hundreds of soldiers, along with tanks and armoured vehicles.
Gaddafi's forces had broken through defences into Martyrs' Square, in the heart of the town, but hours later were pushed back, Shagan said.

Fierce fighting

Fierce fighting between Libyan government forces and rebels took place in Ras Lanuf, which houses a major refinery and petrochemical complex, and the nearby town of Bin Jawad, both in the country's central coast, with reports of opposition fighers having shot down a government helicopter on Sunday.
Al Jazeera's Jacky Rowland reported from Ras Lanuf, where she spoke with rebel fighters on their way back from the frontline, after having come under sniper fire and air attack on the frontline 30-40km to the west of Ras Lanuf on Sunday morning.
"They claim that there were some very young people up on rooftops shooting down at them and they said that they were then attacked from the air,” she said.
And while the rebels have a strong presence in Ras Lanuf, they told her that the town was still held by Gaddafi loyalists.
"What we're seeing is a lot of movement, for the first time in days," she said, adding that the rebel forces are completely disorganised, constantly swinging between euphoria and panic.
"I think that their biggest strength, as far as the rebels are concerned, is the sheers numbers of volunteer fighters. People with no previous military experience came to the call, learning pretty quickly how to operate ... an anti-aircraft carrier."
Hoda Abdel-Hamid, Al Jazeera's correspondent who visited the area, had earlier said that anti-Gaddafi forces told her they are gaining ground in the area surrounding the capital and may be as close as 40km to Sirte.
"The rebels have advanced easily through many other towns, where they have been met with general support, the battle for Sirte is likely to be much tougher," she said.
"Some people fear the big battle will be there."
Benghazi, Libya's second city, is the stronghold of protesters and is firmly in the hands of anti-government forces, but Libyan state television said on Sunday that forces loyal to Gaddafi are on their way to take back the city.

'Britons held'

On the same day, a UK newspaper reported that rebels in Benghazi had captured a British special forces unit.
The Sunday Times reported that the team was taken after a secret mission to make contact with opposition leaders backfired.
Liam Fox, the British defence minister, declined to comment on the reports, only confirming that the UK has a small diplomatic team there.
Meanwhile, the head of the newly-formed interim council, based in Benghazi, told Al Jazeera that the council is pushing for international recognition soon.
Mustafa Abdel Jalil, a former justice minister who defected from Gaddafi's camp after protests against the Libyan leader's rule erupted two weeks ago, told Al Jazeera that a number of former diplomats have been appointed to key posts.
The group announced it had set up a crisis committee, to be headed by Mahmoud Jebril, one of a group of intellectuals who had called for a democratic state.
Omar Hariri, one of the officers who took part in Gaddafi's 1969 coup but was later jailed, was appointed head of military affairs and Ali Essawi, a former ambassador to India who quit last month, was put in charge of foreign affairs.
Gaddafi has had little success in taking back rebel-held territory - which includes the entire eastern half of the country and some cities near the capital - but a number of cities, including Tripoli, remain firmly under his control.
Human rights groups say about 6,000 people have been killed since protests against Gaddafi erupted on February 15. The UN says that more than 1,000 have died.
Western powers say they are studying a no-fly zone against Libya to prevent attacks on civilians.
But diplomats say that no official request for such action has been made to the UN Security Council.