Libyan rebels say they have won control of the strategic oil refinery town of Brega, as a US official confirmed US envoys had met with members of Muammar Gaddafi's regime.
"The bulk of Gaddafi's forces have retreated to Ras Lanuf," rebel spokesman Shamsiddin Abdulmolah told AFP, referring to another oil hub some 50 kilometres (32 miles) to the west.
Even though the Libyan government insisted it still controlled Brega, capturing the town would be a major rebel victory, boosting morale and winning access to infrastructure key to the north African nation's economic future.
Amid building diplomatic pressure on Libyan strongman Gaddafi to step down after four decades in power, US envoys held a rare meeting with regime representatives over the weekend.
Saturday's one-off meeting came a day after the United States and other Western and regional powers recognised the rebel Transitional National Council as Libya's legitimate authority.
US officials "met with regime representatives to deliver a clear and firm message that the only way to move forward is for Gaddafi to step down," a US official said in Washington on condition of anonymity.
"This was not a negotiation. It was the delivery of a message," the official said. "We have no plans to meet again, because the message has been delivered."
The official would not say who was on Gaddafi's side or where the meeting took place, other than that it was outside of Libya.
CNN, quoting a spokesman for Gaddafi 's regime in Libya, said the talks took place in neighbouring Tunisia.
Another US official said the meeting included Jeffrey Feltman, the assistant secretary of state for Near Eastern affairs, and Gene Cretz, who is the US ambassador to Libya but has left the country.
But just hours later, Gaddafi Sunday again defiantly vowed never to go into exile despite the rebel uprising backed by four months of NATO air strikes.
"They are asking me to leave. That's a laugh. I will never leave the land of my ancestors or the people who have sacrificed themselves for me," he told supporters in Zawiyah, west of the capital.
The rebels said Monday that loyalist forces had retreated from Brega leaving just 150-200 fighters pinned down inside the refinery town, but the government insisted it had repulsed the rebel assault.
Citing intercepted radio chatter, another rebel military source said the loyalist forces were led in retreat by their commander, Gaddafi's son Mutassim, leaving just a few fighters with dwindling supplies.
"Their food and water supplies are cut," said Abdulmolah. "It's a matter of time before they come to their senses, we hope to prevent some bloodshed."
But Libyan government spokesman Mussa Ibrahim insisted Brega remained under the "full control" of loyalist forces.
"They tried to recapture the town, but were repulsed losing 500 of their fighters in the battle," Ibrahim told reporters in Tripoli.
Brega is a major centre for channelling oil through the pipelines of the resource-rich Sirte Basin to the rest of the world.
On the approach to the front there were already signs of celebration.
"Tonight we sleep in Brega!" cried 25-year-old Mufta Idris from a sand-smeared Toyota pick-up carrying him and four other fighters to the front.
In nearby Ajdabiya, where many of the 300 rebels wounded in the five days of fighting had been brought, there was a marked lull at the local hospital.
The rebels appeared to have learned lessons from a series of hard-fought military gains that were then overturned by hasty and badly coordinated advances.
"Most of the troops going in right now are anti-mine teams," said Abdulmolah. "We have found an extraordinary number of anti-personnel mines."
And the rebels remain under pressure, some five months into their fierce effort to oust Gaddafi, despite backing from the NATO-led operation aimed at protecting civilians on the ground.
Southwest of Tripoli, Gaddafi's forces continued to fire rockets at rebel positions in Gualish in the Nafusa Mountains and around Bir Ayad, a key junction on the road to Tripoli, rebel commanders said.
Meanwhile, NATO warplanes on Monday hit an antenna radar system at Tripoli's main airport which the regime was using to track allied aircraft, the military alliance said.
