Libyan rebels are battling for control of the road leading to the heartland of government loyalists.
The rebel army has been moving rapidly westwards, but came under heavy attack on the approach to Col Muammar Gaddafi's birthplace of Sirte.
Nato, which now runs the coalition action, has denied its strikes are to provide cover for a rebel advance.
Britain and France have urged Col Gaddafi's supporters to defect "before it is too late".
The anti-Gaddafi rebels have seized a number of key coastal communities and important oil installations in recent days, including Ras Lanuf, Brega, Uqayla and Bin Jawad.
Earlier on Monday, the rebels said they had seized Sirte, but the BBC's Ben Brown in rebel-held Bin Jawad says it is now clear their progress was halted before they reached Sirte.
They came under repeated ambush from government troops, says our correspondent.
Reports said bombardments of the road between Bin Jawad and Nawfaliyah sent the rebels fleeing back towards Bin Jawad.
"This is the front line. The army has stopped over there, we are stopping here," one fighter told Reuters, indicating the road towards the town of Nawfaliyah.
AFP news agency says the shells fired at the poorly armed rebel convoy landed mostly on sand dunes.
"It won't be as easy as we thought to take Sirte and then march on [the capital] Tripoli," one rebel told the news agency.
"But we won't stop - we'll advance. They can't hold us up for long."
AFP said the rebels had again begun to move cautiously towards Sirte, which is about halfway along the coast between Tripoli and Benghazi.
On Sunday, Nato began taking over control of the coalition military action in Libya.
The mission had previously been under US command, with the alliance responsible for enforcing the no-fly zone and arms embargo.
The head of the Nato operation, Canada's Lt Gen Charles Bouchard, has rejected suggestions that the coalition air strikes were to provide cover for the rebels to advance.
"Our goal is to protect and help the civilians and population centres under the threat of attack," he told a news conference.
Lt Gen Bouchard said the alliance was taking steps to ensure "minimum collateral damage".
"Our job is to ensure the safety of people and we will do what it takes to do that, but we will also ensure that we ensure their safety in doing our operation," he said.
Coalition strikes on government military bases are continuing - Britain's Ministry of Defence said its aircraft destroyed ammunition bunkers on Monday morning in the Sabha region, in the southern desert.
France said its jets struck a Gaddafi command centre 10km (six miles) south of Tripoli's suburbs on Sunday night.
Russian Foreign Minister Sergei Lavrov has criticised the military action, saying it goes beyond the remit of the UN Security Council resolution and amounted to interference in a "civil war".
The battle for Misrata, the last significant rebel-held city in western Libya, has continued, with Gaddafi forces reportedly shelling the city on Monday.
But later in the day, the foreign ministry said a ceasefire was in place and that calm had been restored.
"The city of Misrata now enjoys security and tranquillity and public services have started to recover their ability to provide customary services to all citizens," the state news agency Jana quoted officials as saying.
The BBC's world affairs correspondent John Simpson was taken to outskirts of the city on a government visit.
Our correspondent says the fact that the journalists were not taken to the city centre suggests fighting continues there.
Britain and France have issued a joint statement calling on Col Gaddafi's supporters to "leave him before it is too late".
"We call on all Libyans who believe that Gaddafi is leading Libya into a disaster to take the initiative now to organise a transition process," they said.
The countries said this process could involve the rebels' "pioneering" Transitional National Council in Benghazi and "civil society leaders as well as all those prepared to join the process of transition to democracy".
"We encourage them to begin a national political dialogue, leading to a representative process of transition, constitutional reform and preparation for free and fair elections."
Meanwhile, Qatar has become the first Arab nation to recognise the rebel council as the official representatives of the Libyan people.