Libyan rebel forces are pushing towards Col Gaddafi’s hometown of Sirte, having taken most of Tripoli.
They have been exchanging heavy rocket fire with about 1,000 Gaddafi loyalists on the road to the city and are bringing up reinforcements.
Gaddafi forces are still firmly in control of the eastern city as well as Sabha in the desert to the south.
But with supplies and power running short, there are warnings of an impending humanitarian crisis in Libya.
Rebels advancing towards Sirte were also said to be blocked in the town of Bin Jawad as loyalists kept up stiff resistance.
“Gaddafi’s forces are still fighting, we are surprised. We thought they would surrender with the fall of Tripoli,” rebel commander Fawzi Bukatif is quoted as saying by the AFP news agency.
In Italy, Prime Minister Silvio Berlusconi promised to release for the rebels more than 350m euros (£307m; $505m) in Libyan assets frozen in Italian banks.
He announced the news after talks with the head of the rebel National Transitional Council’s (NTC) cabinet, Mahmoud Jibril, who is seeking $2.5bn in immediate aid.
The NTC’s immediate priority is to cover humanitarian costs and pay employees’ salaries, though in the longer term, money will be needed to repair Libya’s oil infrastructure, correspondents say.
On the humanitarian situation, Henry Gray, the emergency co-ordinator for the medical charity Medecins Sans Frontieres in Tripoli says there are two urgent needs.
“Libya’s got a large number of very well-trained, experienced doctors, surgeons and consultants, but for years it’s relied on expatriate nursing staff and paramedical staff, a lot of those have fled the conflict back in April-May. So now there’s a huge gap in basic nursing care, in cleaning, in laboratory technicians that type of thing,” he told the BBC World Service.
“The other main need is in the supply of specialist orthopaedic equipment, but also in terms of anaesthesia drugs, antibiotics for victims of gunshots, explosions, that type of thing.”
The NTC also says it has started the process of moving its headquarters from Benghazi to Tripoli, but that with Gaddafi loyalists still fighting back, a full move has been postponed until next week at the earliest.
Col Gaddafi’s whereabouts are unknown, though rebels have said they think he is still in or around Tripoli.