Libyan forces supporting Col Muammar Gaddafi have advanced on rebel-held strongholds, reportedly recapturing the eastern town of Brega.
Dozens of rebel fighters pulled out of the area amid heavy shelling.
Libyan rebel forces have been losing ground for days, including the key oil port of Ras Lanuf on Saturday.
Meanwhile, the French government said it would speed up its efforts to persuade the international community to impose a no-fly zone over Libya.
Human Rights Watch said Libyan authorities had carried out a wave of "arbitrary arrests and forced disappearances" in the capital, Tripoli.
In other regional developments:
- In Bahrain, riot police fired tear gas and rubber bullets at anti-government protesters blocking the main road into the capital Manama's business district, and encircled the protesters' main camp in Pearl Square, witnesses said
- In Yemen, at least 100 people were injured in clashes between Yemeni police, firing live bullets and tear gas, and anti-government protesters at a demonstration in the capital, witnesses said. It follows the deaths of at least six people in similar clashes in the city on Saturday. The US said it was "deeply concerned" by the attacks on protesters
- In Saudi Arabia, up to 200 people reportedly gathered outside the interior ministry to demand the release of imprisoned relatives
- In Oman, there were signs of concessions. Sultan Qaboos said he would hand over some lawmaking powers to a legislative council
- In Morocco, there were clashes in Casablanca when security forces tried to storm the headquarters of a left-wing party where protesters were sheltering. Police later sealed off the city's main square
In Libya, rebels left on trucks equipped with anti-aircraft guns, retreating from Brega along the coastal road towards Ajdabiya - the gateway to the main rebel-held cities of Benghazi and Tobruk.
They said Col Gaddafi's forces had carried out air strikes, as well as shelling Brega.
The army is "marching to cleanse the country" of insurgents, military spokesman Col Milad Hussein told a news conference in Tripoli.
"Our raids are forcing the terrorists to flee. We have liberated Zawiya, Ujayla, Ras Lanuf and Brega, and the army is advancing to liberate the rest of the regions."
Rebels told the BBC they were heading towards Ajdabiya, 150km (93 miles) south of Benghazi, while Col Gaddafi's forces were about 60km away.
"There's no uprising any more," Nabil Tijouri, a rebel who had been involved in the fighting, told the Reuters news agency. "The other day we were in Ras Lanuf, then Brega, the day after tomorrow they will be in Benghazi."
Ajdabiya is the only sizeable town between Brega and Benghazi.
In Libya's second city, however, the mood remains defiant, says the BBC's Pascale Harter, with many wounded fighters returning but other residents heading for the front line.
The BBC's Jon Leyne in Benghazi says the big question now is whether Col Gaddafi has the forces and the back-up to try and recapture the rest of the country. A battle for Benghazi would be far bloodier than anything seen so far, he adds.
Meanwhile, reports from the last major rebel-controlled city in western Libya, Misrata, said it was surrounded by Col Gaddafi's troops.
Some rebels told Reuters on Sunday night that the government offensive had been halted by fighting amongst government troops. There had been a mutiny after some refused to attack Misrata, they claimed.
But a government spokesman dismissed the reports as "rubbish", and said its forces were instead negotiating a surrender with tribal elders.
Human Rights Watch, reporting on the situation in Tripoli, said security forces had "arrested scores of anti-government protesters, suspected government critics, and those alleged to have provided information to international media and human rights organisations".
It said some of those detained had been tortured.
"Given Libya's record of torture and political killings, we worry deeply about the fate of those taken away," said Sarah Leah Whitson, the group's Middle East and North Africa director.
International diplomatic pressure is growing for a no-fly zone over Libya.
The policy would be aimed at preventing Col Gaddafi's forces using warplanes to attack rebel positions, although no clear position has emerged on exactly how this would be achieved.
On Saturday, the Arab League agreed to ask the UN Security Council to enforce such a zone, a move the US called an "important step".
The UK and France have pushed for the idea, but have failed so far to win firm backing from the EU or Nato.
On Sunday, France said it would step up its efforts, in conjunction with the EU, the Arab League, the UN Security Council and the rebel Libyan National Council.
It also said Libya would be discussed at a meeting of the Group of Eight (G8) foreign ministers beginning in Paris on Monday.
Nato has previously cited regional and international support for the idea as a key condition before it could possibly go ahead.
Russia and China, which wield vetoes on the UN Security Council, have expressed serious reservations on the issue.