Hundreds of fighters aligned with Libya's National Transitional Council met fierce resistance as they pushed into the center of Sirte with the support of heavy artillery and NATO warplanes.
Al Jazeera correspondents said NTC fighters on began the assault early on Saturday and had soon overrun positions that forces loyal to deposed dictator Muammar Gaddafi had held for months.
Their progress was stalled, however, when Gaddafi's forces battled back with mortars, rocket-propelled grenades and rooftop snipers. Witnesses described frequent explosions, NATO bombing runs and intense gunbattles in Sirte and its outlying areas.
"They have snipers above the mosques, above the buildings. They're using the houses and public buildings," NTC fighter El-Tohamy Abuzein told the Reuters news agency from his position in Zafran Square.
Ambulances have been carrying casualties from the fighting, with one medic estimating that at least one NTC fighter had been killed and 25 wounded.
NATO, whose warplanes hit a number of targets in Sirte in the last 24 hours, including an ammunition
depot and an anti-aircraft gun.
It said in a statement the air attacks had been mounted to protect civilians from Gaddafi forces inside the town. There were separate reports of Gaddafi troops using civilians as human shields.
"Among the reports emerging from Sirte are executions, hostage-taking, and the calculated targeting of individuals, families, and communities within the city," NATO said.
Even so, Al Jazeera's Hashem Ahelbarra, reporting from Tripoli, said NTC commanders felt it could be "just a matter of hours" before the city was under their control.
"If the forces attacking from the west can coordinate with forces in the east to control the city, tonight or earlier, it will be significant because this is the birthplace of Gaddafi. If it falls, the forces can coordinate efforts and make the final push toward Bani Walid," said Ahelbarra, in reference to another Gaddafi stronghold that has withstood NTC assaults.
By Saturday afternoon, NTC fighters occupied a key roundabout called Zafaran west of Sirte's downtown area and said their goal was to occupy two neighborhoods on the western side of the city.
AL Jazeera correspondent Sue Turton, also reporting from the frontline, said the feeling among NTC forces is that the "end game" for Sirte has begun.
"[The feeling is] that if pro-Gaddafi fighters don't surrender they will be trapped between two attacks from the east and west," Turton said.
The two sides have been locked in a standoff since former rebels tried to advance on the city a week ago but were repelled by fierce resistance.
Sirte, 400km southeast of Tripoli on the Mediterranean coast, is Gaddafi's hometown and one of three strongholds that refused to surrender after revolutionary forces seized control of Tripoli late last month after a civil war against his 42-year rule.
Revolutionary fighters tried to push into the city last weekend but were driven back by fierce rocket and gunfire, with at least 25 former rebels killed and dozens wounded. They pulled back to regroup and let civilians leave the area, although the two sides exchanged fire daily.
Revolutionary forces said more than 1,300 families have left the city in the past week. A few dozen waiting at a checkpoint outside the city on Saturday described rapidly deteriorating conditions, with entire families hiding in basements and children suffering from illnesses and a lack of food and clean water.
A commander of one of the brigades fighting for Sirte, Mohammed al-Sugatri, said foot soldiers had gone past the roundabout and were heading toward the downtown area. He said Gaddafi's forces and snipers also were attacking from buildings on the outskirts of the city.
The former rebels had said they would wait until civilians could escape,but al-Sugatri said commanders decided to advance because several families from the rebel-held city of Misrata were in danger.
"There are lots of people from Misrata who are stuck in the city living in basements. They have no food or water and many of their children are sick so we had no choice but to attack," he said.
A field outside the city's western side was filled with trucks and ambulances filled with wounded men.
Munther Kareyem, a doctor at the field hospital, said one dead fighter and more than 25 wounded had been brought in with shrapnel wounds. One man lost a leg.
NTC premier Mahmoud Jibril told world leaders at the United Nations on Saturday that "a new Libya is coming to life" as a nation committed to democracy, equality and reintegration into the international community.
Jibril said the NTC is committed to drafting a constitution that would be put to the Libyans for a referendum, noting that national unity is impossible without a united land and national reconciliation.
In Benghazi also on Saturday, the head of the NTC has said an interim government will be announced in the coming week.
Mustafa Abdul-Jalil said Libyans must unite to form a new government. The NTC failed to seat a new cabinet last week amid disagreements over which cities should be represented and other issues.
Abdul-Jalil spoke to reporters after returning from New York where he and Jibril represented Libya at the first post-Gaddafi meeting of the UN General Assembly.
Libya's interim rulers will hold an urgent meeting on Sunday to discuss the formation of a "crisis government", signaling a breakthrough in efforts to form a more inclusive administration after the war.
"We've agreed on a number of portfolios and who would hold the most important ones. There will be 22 portfolios and one vice-premier," Abdel Hafiz Ghoga, a spokesman for the NTC, said.
"It will be a compact government, a crisis government."
Earlier this month, Mustafa Abdul-Jalil, the chief of Libya's revolutionary movement, called for the Libyan people to form a democratic state based on Islamic law.