Libya's revolutionary leaders say that negotiations over the peaceful handover of the loyalist town of Bani Walid, 150km southeast of the capital Tripoli, have collapsed and fighters have surrounded the city.
Al Jazeera's Sue Turton, reporting from near Bani Walid on Sunday, said the fighters were now hoping the people in the town would rise up against supporters of Muammar Gaddafi, the deposed Libyan leader.
"The negotiations are dead and buried," she said.
Our correspondent said fighters belonging to the National Transitional Council (NTC) outside Bani Walid estimated the number of Gaddafi troops remaining in the town at less than 100.
"This is aside from the Gaddafi loyalists who we've heard have come out, who are manning checkpoints ... civilians who have weapons," she said.
Al Jazeera's Andrew Simmons, reporting from Al-Saddadah, southeast of Tripoli, said he had heard reports of fighting within Bani Walid.
"This could be that that there are sleeper groups in that town [of Bani Walid] who are very much supporting the revolution and have started to rise in some parts of the town," he said.
'Fighters in control'
Earlier on Sunday, speaking in the eastern city of Benghazi, Ahmed Bani, the NTC's military spokesman, said that its fighters were in control of key strategic points around Bani Walid.
"There was fighting in Bani Walid, now I can say our revolutionaries have control of some important points around Bani Walid. And they are raising the independence flag over there," he said.
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"Soon Bani Walid will be liberated completely."
Speaking later to Al Jazeera, Bani confirmed reports of the deaths of Gaddafi's sons, Khamis, and a son of the former spy chief Abdullah Senussi, Muhammad.
Khamis had died in flighting close to Tripoli and was buried near Bani Walid, he said.
Bani Walid has been speculated to be a possible refuge for Gaddafi and other members of his family.
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.
The town, along with Sirte on the Mediterranean coast and Sabha deep in the Sahara desert, are the last pockets of support for Gaddafi.
"What the NTC are hoping for Bani Walid, if they manage to get a settlement there, is that it will be the model for the other two towns," Al Jazeera's Turton said.
Moussa Ibrahim, Gaddafi's spokesman, has dismissed suggestions that Bani Walid is about to surrender and insisted that tribal leaders there are still loyal to the deposed leader.
UN concern over arms
Ian Martin, a special envoy for the UN secretary-general, told Reuters in Tripoli that Libya's election process needed to begin soon and said the proliferation of weapons was a "major concern".
"I am here now to discuss with the National Transitional Council how the United Nations can be most helpful in the future," he said 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," said Martin.