Cities that have not declared allegiance to Libya's National Transitional Council (NTC) have been given a week's notice to do so, Mustafa Abdel Jalil, the head of Libya's transitional authorities, has said.
At a press conference in Benghazi on Saturday, Jalil said his forces would lay siege to pro-Gaddafi cities until a deadline for their surrender expires next week.
Jalil said his forces were supplying the cities of Sirte, Bani Walid, Jufra and Sabha with humanitarian aid despite the siege.
Al Jazeera's Sue Turton reporting from near Bani Walid said on Saturday that she witnessed a group of representatives from Bani Walid negotiating with NTC fighters. The team from Bani Walid told the Libyan fighters that they wanted two more days before surrendering their weapons, our correspondent said.
"The Libyan fighters are getting quite cross, they are saying we have been negotiating with you for months to lay down your weapons," Turton said. "They are suspicious and are still not completely convinced that this surrender is going to happen."
Some NTC fighters, who established a frontline about 30km from Bani Wali, suggested on Saturday that the town could be attacked within hours, and Al Jazeera's James Bays said on Sunday morning: "[NTC] forces are now surrounding Bani Walid and threatening to go in."
Bani Walid has been speculated to be a possible refuge for toppled Libyan leader Muammar Gaddafi and other members of his family.
Our correspondent also said that fighters continue to hope for peaceful results from the negotiations, but that they are preparing for battle just in case.
"There are three different places that we're talking about: Bani Walid, Sabha in the south, and Sirte, which is Gaddafi's hometown. [They all have] similar situations.
"What the NTC are hoping for Bani Walid, if they manage to get a settlement there, that [it] will be the model for the other two."
Abdulrazzak Naduri, an NTC military commander in nearby Tarhuna, told the Reuters news agency that one of Gaddafi son's, Saadi, was in the town while another, Saif al-Islam, had recently fled.
'We know where Gaddafi is'
The city, along with Sirte on the Mediterranean coast and Sabha deep in the Sahara desert, are the main pockets not under the control of NTC forces.
At a news conference in Tripoli, Ali Tarhouni, the NTC's oil minister, said there had been no fighting in Bani Walid on Saturday. Asked if Gaddafi was in the town, as claimed by NTC military commanders, Tarhouni said: "As for Gaddafi himself... we know where he is."
Gaddafi's spokesman dismissed suggestions that Bani Walid was about to surrender and insisted that tribal leaders there were still loyal to the deposed leader.
"Bani Walid is a major city hosting one of the biggest tribes in Libya who have declared their allegiance to the leader and they refused all approaches for negotiation with the Transitional Council," Moussa Ibrahim told Reuters in a telephone interview.
Asked about Gaddafi's whereabouts, Ibrahim said the toppled leader was "in a safe place surrounded by many people who are prepared to protect him".
Papers 'show CIA and MI6 links'
Meanwhile, papers found at the abandoned office of Moussa Koussa, Gaddafi's former intelligence chief, indicate close links between US and British intelligence services and the Libyan regime, Human Rights Watch said on Saturday.
The documents suggest Abdel Hakim Belhadj, the current military commander for Tripoli of Libya's National Transitional Government (NTC), was among those captured and sent to Libya by the CIA, Human Rights Watch said.
Tarhouni on Saturday also announced the creation of a supreme security council to protect Tripoli.
"The main goal is to protect citizens, as well as public and private establishments, and to eliminate what remains of pro-Gaddafi groups, or what is called the fifth column," Tarhouni said.
He said NTC fighters would temporarily assist police forces in securing the streets of the capital, despite earlier reports suggesting that the transitional authorities had ordered many of those who took part in the attack on the capital to return home.
UN special envoy in Tripoli
A special envoy for Ban Ki-moon, the UN secretary general, arrived in Tripoli on Saturday to deliver a message that the world body was ready to assist in re-establishing security after the nearly seven-month uprising that toppled Gaddafi.
"I am here now to discuss with the National Transitional Council how the United Nations can be most helpful in the future," Ian Martin told reporters on arrival.
Martin arrived amid questions about the UN's future role in the country, particularly about whether a peacekeeping mission will be necessary.
"I think the future leaders of Libya face a very big challenge, they have already shown the ways in which they are ready to tackle that challenge and it will be the commitment of the United Nations to assist them in any way they ask."