At least 10 people were killed and 30 wounded when Libyan government forces bombarded targets in the western rebel-held city of Misrata, medics say.
Two big explosions shook the city centre after grad rockets were fired from positions to the south.
Nato planes carried out daytime attacks earlier on government and military targets in the capital Tripoli.
The rebels also denied suggestions by a Russian envoy that they had been negotiating with Col Muammar Gaddafi.
Mahmoud Jibril, who is responsible for foreign affairs for the rebel Transitional National Council, said there had never been any talks.
Speaking in Naples after meeting Italian Foreign Minister Franco Frattini, he said that were negotiations to take place, the TNC would "announce it out of commitment to our friends all over the world".
He added: "We pursue every means possible, whether political, whether military, to liberate our country and establish democratic government based on a constitution and equal rights."
Russian envoy Mikhail Margelov told reporters in Tunis that there had been "a sort of communication channel" in Norway, Germany and France.
Libyan Prime Minister al-Baghdadi al-Mahmoudi also said there had been "meetings" and that he could "name the persons" who had attended.
"We are sure of our meetings and everything has been recorded," he said. "Our doors are open to all and we are in contact with all the parties."
On Friday, barrages of shells and rockets landed on territory held by rebel fighters between Dafniya and Zlitan, the next towns on the road to Tripoli from Misrata, as they continued trying to advance westwards after weeks of being besieged by Col Gaddafi's forces.
The rebels returned fire from the front line, about 32km (20 miles) away from Misrata, with their own artillery and rocket launchers.
A rebel commander, Mohammed Ali, said they were aiming at tanks and munitions stores in Naima, near Zlitan.
"We had a strategy to finish everything today but some of the fighters think it's a game," he told the Reuters news agency. "They shot when they weren't supposed to shoot and they have ruined it."
Nato military spokesman Wing Cdr Mike Bracken told reporters that there were "some positive signs that civilians are unifying against the Gaddafi regime" in the area.
"The situation is highly charged, but for the time being pro-Gaddafi forces appear unable to strongly counter the anti-Gaddafi forces' incremental advances towards Tripoli."
In Misrata, rebel spokesman Ahmed Hassan said 10 civilians had been killed and another 40 wounded when shells and rockets landed in the city. He said the body of a woman was found in the rubble of her house.
The BBC's Andrew Harding in Misrata says the bombardment is an alarming development for the hundreds of thousands of civilians still living in the besieged city.
The rebel fighters thought they had pushed Col Gaddafi's forces back far enough to be out of range, but in the past few days the nearby port has come under rocket attack, and now the city itself, he adds.
A rebel spokesman also said there were battles near the town of Nalut in the Western Mountains, south-west of Tripoli, and that pro-Gaddafi forces had been shelling rebel fighters.
What started as a peaceful uprising against Col Gaddafi's 41-year-rule four months ago has grown into a civil war, with the rebels now holding a third of the country in the east and pockets in the west, including Misrata.
Tripoli remains firmly under the control of the government, however, despite Nato ramping up pressure by launching more daytime air strikes.
Loud blasts rumbled across the city on Friday shortly after the Nato jets flew over, and emergency services raced through the streets as columns of thick, black smoke rose into the sky.
The state news agency, Jana, said the strikes killed four people and wounded four others. A bomb also hit the al-Fatah University, it said. There was no independent confirmation of the report.
The government complained that an overnight raid by Nato hit a public security building, killing a number of people and destroying criminal records.
Later, Libyan state TV broadcast an audio message from Col Gaddafi, in which he vowed to defeat Nato and never to leave the country.
"This is the first time they are facing an armed nation of millions," he shouted. "They will be defeated. The alliance will be defeated."
"We are in our country and we are determined to stay and defend it. We are staying, we are staying. Let them even use nuclear bombs."
Col Gaddafi also labelled the rebels as cowards and "sons of dogs", who were relying on money from the "donkeys of Qatar, and the donkeys of the Gulf".
Meanwhile, the United Nations has extended the mandate of human rights investigators looking into events in Libya.
The UN Human Rights Council agreed that its inquiry team should have more time. The council has already accused both sides of violating human rights.