Rebels downed a military aircraft on Monday as they fought a government bid to take back Libya's third city, Misrata, a witness said, while foreign ministers discussed how to help them oust Muammar Gaddafi.
Gaddafi's forces have been trying for days to push back a revolt that has won over large parts of the military, ended his control over eastern Libya and is holding the government at bay in western cities near the capital Tripoli.
In both Libya's third city, Misrata, 200km to the east, and Zawiyah, a strategic refinery town 50km to the west, rebels with military backing were holding the town centres against repeated government attacks.
"An aircraft was shot down this morning while it was firing on the local radio station. Protesters captured its crew," the witness, Mohamed, told Reuters by telephone.
"Fighting to control the military air base started last night and is still going on. Gaddafi's forces control only a small part of the base. Protesters control a large part of this base where there is ammunition."
Foreign governments are increasing the pressure on Gaddafi to leave in the hope of ending fighting that has claimed at least 1,000 lives and restoring order to a country that accounts for two percent of the world's oil production.
The UN Security Council has slapped sanctions on Gaddafi and other Libyan authorities, imposed an arms embargo and frozen Libyan assets, while making clear that those who used violence against civilians would face international justice.
US Secretary of State Hillary Clinton, Russian Foreign Minister Sergei Lavrov, European Union foreign policy chief Catherine Ashton and others were holding bilateral talks at a human rights conference in Geneva to coordinate further action.
European powers including erstwhile ally Italy said it was time for Gaddafi to quit and Clinton said the United States was "reaching out" to opposition groups.
A US official in Geneva said a central aim of sanctions was to "send a message not only to Gaddafi ... but to the people around Gaddafi, who are the ones we're really seeking to influence".
Revolutions in neighbouring Tunisia and Egypt have helped to ignite resentment of four decades of often bloody political repression under Gaddafi as well as his failure to use Libya's oil wealth to tackle widespread poverty and lack of opportunity.
Gaddafi himself has been defiant, but a spokesman struck a new, conciliatory tone at a briefing on Monday.
Spokesman Mussa Ibrahim conceded that government forces had fired on civilians, but said this was because they were not properly trained.
"So they shot and killed some civilians," he said. "We never denied that hundreds of people have been killed."
He also said the revolt had "started as a genuine peaceful movement".
"We also believe it is time for change," he said. "But this movement has been hijacked by the West ... and by Islamic militants."
Regional experts expect rebels eventually to take the capital and kill or capture Gaddafi, but add that he has the firepower to foment chaos or civil war -- a prospect he and his sons have warned of.
Rebels holding Zawiyah said about 2,000 troops loyal to Gaddafi had surrounded the city.
"We will do our best to fight them off. They will attack soon," said a former police major who switched sides and joined the rebellion. "If we are fighting for freedom, we are ready to die for it."
Residents even in parts of the capital Tripoli have thrown up barricades against government forces. A general in the east of the country, where Gaddafi's power has evaporated, told Reuters his forces were ready to help rebels in the west.
"Our brothers in Tripoli say: `We are fine so far, we do not need help'. If they ask for help we are ready to move," said General Ahmed el-Gatrani, one of most senior figures in the mutinous army in Benghazi.
Opposition forces are largely in control of Libya's oil facilities, which are mostly located in the east, and output has been reduced to a trickle.
Bank of America Merrill Lynch said in a note to its clients that the unrest could mean Libyan supplies were unavailable to the market for months.
Benchmark Brent oil futures were slightly lower at just under $112 a barrel.
In the eastern city of Benghazi, opponents of the 68-year-old leader said they had formed a National Libyan Council to be the "face" of the revolution, but it was unclear who they represented.
They said they wanted no foreign intervention and had not made contact with foreign governments.
The "Network of Free Ulema," claiming to represent "some of Libya's most senior and most respected Muslim scholars", issued a statement urging "total rebellion" and endorsing the formation of an "interim government" announced two days ago.
Western leaders, emboldened by evacuations that have brought home many of their citizens from the vast desert state, have been speaking out clearly against Gaddafi.
"We have reached, I believe, a point of no return," Italian Foreign Minister Franco Frattini said on Sunday, adding it was "inevitable" that Gaddafi would leave power.
Britain's former prime minister, Tony Blair, said he had spoken to Gaddafi on Friday and told him to go.
"He was in denial that these things are going on," Blair said. "The strategic objective is that there is a change in leadership in Libya with the minimum further bloodshed. Far too many people have died; there has been far too much violence."
Blair helped to end the Western isolation of Gaddafi over his support for international terrorism after he agreed to renounce weapons of mass destruction, paving the way for big British business deals in Libya.
Wealthy states have sent planes and ships to bring home expatriate workers but many more, from poorer countries, are stranded. Thousands of Egyptians streamed into Tunisia on Sunday, complaining Cairo had done nothing to help them.
The United Nations refugee agency said on Sunday nearly 100,000 people have fled violence in Libya in the past week in a growing humanitarian crisis.
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