Libyan fighters have said they are waiting for civilians to escape from Sirte, the hometown and stronghold of former leader Muammar Gaddafi, before they start their final advance.
Several attempts by National Transitional Council's (NTC) fighters to take Sirte and Bani Walid, two of Gaddafi's remaining major strongholds, in the past week have ended in disarray and panicked retreat.
Fighters making their way back from the front line said they met fierce resistance at Khamseen, 50km east of Sirte, and that they lacked the firepower to respond.
"I'm 100 per cent sure that there is someone important in Sirte, either Gaddafi himself or one of his sons, because his forces have become suicidal in the Khamseen area," NTC fighter Hamed al-Hachy said on Wednesday.
In Bani Walid, NTC forces moved tanks towards the frontline on Wednesday in an attempt to capture the town.
"Of course it will certainly help us a lot in the final battle. You have seen these tanks. There are also Grads and we will use them by putting them in the front," Abdul Salaam Ganuna, an NTC commander, said.
Almost a month after armed rebels, backed by a NATO bombing campaign, seized control of Tripoli, Libya's new leaders are still trying to assert their authority over the desert town 56km southeast of the capital.
Key town taken
NTC fighters, however, claimed that they had overrun the key southern city of Sabha.
"We are in complete control of the city of Sabha. Everybody, including [those who were] pro-Gaddafi, are now with the revolution," Abdelmajid Seif Ennasr, an official for the NTC in Sabha, said on Wednesday.
He added that the NTC fighters were only encountering "resistance from some individuals here and there".
"Sabha is totally under the control of the revolutionaries," said Mohammed Wardugu, the Benghazi spokesman of the "Desert Shield Brigade" that is fighting in the region.
On Tuesday, Wardugu said the NTC forces had taken control of the airport and a garrison in Sabha and forced 300 pro-Gaddafi mercenaries to flee before capturing 150 of his loyalists.
Many residents of Sabha fear reprisals from the NTC because of a belief that many fought as Gaddafi mercenaries during the civil war.
Sabha, the largest city in the Libyan desert, is home to 100,000 people and an important military base, making it strategically vital.
There were reports earlier that Gaddafi himself may be hiding in the town, along with Saif al-Islam, his most politically prominent son, but NTC fighters in Sabha have reported no signs of them.
Meanwhile, NATO countries gave the NTC another boost by extending for three more months the air cover that helped anti-Gaddafi fighters to victory.
The decision was taken at a meeting of ambassadors of NATO's 28 member states in Brussels, a diplomat said.
NATO took command of Libya's military mission on March 31 under a UN mandate to protect Libyan civilians.
On the field, Britain said its planes had struck at pro-Gaddafi troops in three areas and destroyed bases in Sirte and Bani Walid.
A Syrian-based TV, which has broadcast several audio messages from Gaddafi, his sons and his aides, also reported NATO attacks on Sirte.
Arrai TV said NATO warships and planes had hit a hospital in Sirte on Wednesday, wounding a Ukrainian doctor and patients.
It was not immediately possible to verify the report. Previous allegations of NATO causing civilian deaths have rarely been backed up with evidence.
Clashes were also reported on the Tunisian border.
A Tunisian defence ministry spokesman said its troops had killed several infiltrators in clashes near the border with Algeria on Wednesday.
Helicopters destroyed seven vehicles mounted with anti-aircraft guns, which had been used to fire at a Tunisian army helicopter, the spokesman said.