Muammar Gaddafi has probably left the Libyan desert town of Bani Walid and is heading further south with the help of loyalist tribes towards Chad or Niger, Reuters news agency quoted a senior military official in Libya's new leadership as saying.
Hisham Buhagiar, who is co-ordinating the National Transitional Council's efforts to find the former Libyan leader, said reports indicated that he may have been in the region of the southern village of Ghwat, about 950km south of Tripoli and 300km north of the border with Niger, three days ago.
"He's out of Bani Walid I think. The last tracks, he was in the Ghwat area. People saw the cars going in that direction .... We have it from many sources that he's trying to go further south, towards Chad or Niger," Buhagiar said in an interview late on Tuesday.
Gaddafi, who was removed from power in August after a February uprising against his rule spread to the capital Tripoli, is believed to be travelling in a convoy of about 10 cars and may be using a tent as shelter, Buhagiar said.
"It's the tent. We know that he doesn't want to stay in a house, so he stays in a tent. People say the cars came, and then they made a tent," he said, adding that his sources had not seen Gaddafi themselves.
Convoy enters Niger
Earlier on Tuesday, military sources from France and Niger told Reuters that scores of Libyan army vehicles had recently crossed the desert border with Niger, in what may be a bid by Gaddafi to seek refuge in a friendly African state.
Gaddafi has long touted his tribal, desert roots, and even received foreign dignitaries in a tent. He also has portrayed himself as an African leader and has boosted his influence in Africa through loans, aid and diplomatic contacts.
The United States said it believed the convoy was carrying senior members of Gaddafi's entourage, and urged Niger to detain anyone liable for prosecution for alleged crimes committed during the uprising against the deposed Libyan leader.
Leon Panetta, the US defense secretary, said Gaddafi was "on the run" but Washington said it had no reason to believe the fugitive leader had left Libya, something his spokesman Moussa Ibrahim confirmed.
"He is in Libya. He is safe, he is very healthy, in high morale," he told Reuters by telephone from an undisclosed location.
The convoy included officers from Libya's southern army battalions and pro-Gaddafi Tuareg fighters and is likely to have crossed from Libya into Algeria before entering Niger, sources said.
Abdou Labo, the Niger's minister of internal affairs, however, denied that a Libyan convoy had entered his country. But he confirmed that Niger had given asylum to Gaddafi's internal security chief Abdullah Mansoor on humanitarian grounds.
Al Jazeera's James Bays, reporting from Tripoli, said information about the specifics of the convoy were contradictory, but it was certain that a convoy had crossed.
"What is significant is that none of the reports we have heard so far says anything about sighting of Gaddafi and his sons in the convoy."
A French military source said he had been told the commander of Libya's southern forces, General Ali Khana, may also be in Niger, not far from the Libyan border.
He said he had been told that Gaddafi and his son Saif would join Khana and catch up with the convoy should they choose to accept Burkina Faso's offer of exile.
Burkina Faso, a former recipient of large amounts of Libyan aid, had reportedly offered Gaddafi exile about two weeks ago, but has also recognised the NTC as Libya's government.
On Tuesday, however, Burkina Faso's government said it had not received a request for exile from Gaddafi and the deposed leader was not expected in the West African state.
"Gaddafi in not in Burkina Faso and we have not been approached for any exile demand. Burkina (Faso) has not been informed of Gaddafi's arrival. We are not expecting him," Alain Edouard Traore, communications minister, said on state television.
Surrender talks fail
Also on Tuesday, NTC fighters were preparing for an imminent attack on Bani Walid as efforts for a peaceful resolution to a standoff with Gaddafi loyalists seem to have failed.
During prolonged negotiations, the NTC tried to convince representatives from Bani Walid, about 150km southeast of the capital Tripoli, that there would be no retributions if the the town surrendered peacefully.
But the representatives, upon returning to the town to deliver the message, were fired at and forced to retreat to NTC territory.
Al Jazeera's Sue Turton, reporting from north of Bani Walid, said the situation seemed bleak and an attack seemed imminent.
"The five Bani Walid representatives went back with the assurances from NTC, but as they approached the city, they were fired upon. They quickly came back to the rebel territory to take shelter for the night," she said.
"We have talked to commanders and people here. They believe two of Gaddafi sons are still in the city, that's why no negotations work here."
Thousands of NTC fighters have been camping outside Bani Walid. They have also built a field hospital and deployed 10 volunteer doctors to prepare for the possibility of a fight.