Fighters supporting Libya's interim government have raced into the eastern outskirts of Sirte backed by NATO warplanes and are fighting street-to-street battles with loyalists of Muammar Gaddafi in his home town.
Thick black smoke billowed into the air as National Transitional Council (NTC) fighters battled at a roundabout about 2km from the centre of the key town on Monday.
The thud of large explosions could be heard as NATO aircraft roared overhead, but NATO would not comment on latest operations in Sirte.
NTC fighters fought with machineguns and rifles and moved tanks and heavy artillery into the town.
"[NTC fighters] are entering the city from the east for the first time," Al Jazeera's Sue Turton, reporting from the frontlines, said.
"But there is only so much that NATO can do because there are civilians still in the city."
NTC fighters had pulled out of the town a day earlier after facing stiff resistance.
Sirte, besides the town of Bani Walid, are still controlled by loyalists of Gaddafi, who was driven out of capital Tripoli after months of fighting.
Abu Salim massacre
Meanwhile, Libya's new rulers have revealed the discovery of a mass grave believed to hold the remains of more than 1,200 people in the Libyan capital.
Khalid Sharif, a spokesman for the NTC's military council, said the bodies were those of prisoners who were executed at Tripoli's notorious Abu Salim jail in 1996 - though it was not immediately possible to verify the claim.
"We found the place where all these martyrs were buried," said Sharif, adding it was evidence of "criminal acts" by Gaddafi's regime.
Salim al-Farjani, a member of the committee set up to identify the remains, appealed for international help.
"We call on foreign organisations and the international community to help us in this task of identifying the remains of more than 1,700 people," said Farjani.
The massacre of the inmates helped trigger the revolt in February, when families of Abu Salim victims in the eastern city of Benghazi called for protests against the arrest of their lawyer.
Farjani said he witnessed the gruesome site where the Abu Salim victims were found.
"We were invited to visit the place where the corpses of the prisoners at Abu Salim were found, where we saw scattered human bones," he said.
Farjani also referred to "egregious acts committed against dead bodies, on which acid was poured to eliminate any evidence of this massacre".
International rights groups had for years urged Gaddafi's regime to come clean about the fate of prisoners killed at the jail.