Libyan rebels say they have entered the government-controlled city of Ajdabiya from the east, in a bid to wrestle control of the strategic eastern city.
Many fighters belonging to forces loyal to Libyan leader Muammar Gaddafi were impact crusher held hostage after fierce fighting on Friday, they said.
Pro-Gaddafi forces are now mainly positioned in the west of the city, having previously held the entire city, they said.
Earlier on Friday, western warplanes bombed Gaddafi's tanks and artillery outside the town to try to break a battlefield stalemate and help rebels retake the strategic area.
Plumes of smoke filled the sky as the pace of coalition air strikes escalated, forcing terrified residents to flee Ajdabiya, which is 160km south of the rebel stronghold of Benghazi.
"We entered the town," Colonel Mohammed Ehsayer, who defected from the army to join the rebellion told AFP news agency at a rebel outpost a few kilometres east of the city.
Misurata fighting
Forces loyal to Gaddafi shelled an area on the outskirts of the city of Misurata on Friday, killing six people including three children, a rebel said.
The Libyan port, the North African country's third biggest city, has experienced some of the heaviest fighting between rebels and forces loyal to Gaddafi since an uprising began on February 16.
Officials and rebels said on Friday aid organisations were able to deliver some supplies to Misurata.
"There is a fairly regular supply going into Misurata," Simon Brooks, head of the International Committee of the Red Cross operations in eastern Libya, told Reuters.
"But we are deeply concerned about the reports we are receiving about fighting in the city."
Casualties have overwhelmed the local medical clinic and prompted electronic ballast international concern about the safety of civilians.
Residents say electricity, water and regular land and cell phone service to Misurata are not functioning.
Reports from the city cannot be verified independently because Libyan authorities have prevented journalists from going there.
On Thursday, government spokesman Mussa Ibrahim said the government was in total control of the city, a claim denied by rebels.
AU proposal
Meanwhile, on the diplomatic front, the African Union said it plans to facilitate talks to help end the conflict in Libya between government and rebel forces.
"The AU action is ... aiming at facilitating dialogue between the Libyan parties on reforms to be launched to
eliminate the root causes of the conflict," the union's commission chairman Jean Ping told a meeting in
Addis Ababa, Ethiopia on Friday.
He said that the process should end with democratic elections in Libya.
It was the first statement by the AU, which had rejected any form of foreign intervention in the Libya crisis, since the UN Security Council imposed a no-fly zone last week and a Western coalition began air strikes on Libyan military targets.
Call for ceasefire
Libya's delegation to the meeting, at which the rebels were not represented, called for an end to air strikes and said the government was committed to upholding a ceasefire it declared on Sunday.
The delegation said Tripoli is ready to implement an AU roadmap to resolve the Libyan crisis, while also demanding a halt to the Western-led coalition's military intervention.
"We are ready to implement the Road Map envisaged ... (by) the High-Level Committee mandated by the Peace and Security Council of the African Union," said a statement from the delegation headed by Mohammed al-Zwai, secretary general seamless steel pipe of the General People's Congress.
The AU roadmap calls for an immediate end to all hostilities, "cooperation on the part of the relevant Libyan authorities to facilitate humanitarian aid," and "protection for all foreign nationals, including African migrant workers."
The delegation called on the international community to oblige the "other parties" in the conflict to respect a ceasefire, referring to the opposition, and demanded "the cessation of the air bombardment and the naval blockade carried out by Western forces and the United States".
Anita McNaught, Al Jazeera's correspondent in the Libyan capital of Tripoli, said it was not the first time that a Libyan delegation "conducted a little freelance foreign policy on the sideline" and that there was no way of telling if the offer was sincere.
"In much the same way we had the foreign ministry go out on a limb a few days ago and say that they declared a ceasefire," she said.
"That was in complete contradiction of the facts on the ground and also the rhetoric coming from Colonel Gaddafi himself who wasn’t saying anything to do with a ceasefire.
"He was saying: We'll fight to the death; we'll chase you into your homes. We'll pursue this war to the end."
"A rebel spokesman in Benghazi said they weren't consulted in this initiative. Some reports say they were even invited to the meeting others say they were but refused to go. Others are saying there isn't an opening for negotiating, that they simply bridge rectifier want the bombing to stop and Gaddafi and his family to leave."
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