Libyan rebels claim victory in battle for Brega
Libyan rebels say they are largely in control of the key eastern town of Brega, and that forces loyal to Col Muammar Gaddafi are retreating west.
The Libyan government denies the claims, saying it is in full control of Brega, having killed 500 rebels there.
Meanwhile, the US government said it held a day of face-to-face talks with a delegation from Tripoli on Saturday.
The meeting was not a negotiation but to demand that Col Gaddafi step down, which he has repeatedly refused to do.
"The message was simple and unambiguous - Gaddafi must leave power so that a new political process can begin that reflects the will and aspirations of the Libyan people," a statement from the US State Department said.
Libyan government spokesman Moussa Ibrahim hailed the talks - which he said took place in neighbouring Tunisia - as an important step in "repairing relations" with the US, but American officials said no further talks were planned "because the message has been delivered".
Washington would not say who represented the Libyan side, nor where the meeting took place. It said Jeffrey Feltman, the US assistant secretary of state for near eastern affairs, and the US ambassador to Libya Gene Cretz, had been involved.
'Turn Brega into hell'
Meanwhile, fighting continues in Brega, where rebels have been trying to battle pro-Gaddafi forces since Thursday, often fighting at close range in residential areas.
Brega, about 750km (465 miles) east of the capital Tripoli, has changed hands several times in the fighting along Libya's Mediterranean coast since the rebellion began in February.
It has not been possible to verify the conflicting claims about who controls the oil hub.
"The bulk of Gaddafi's forces have retreated to Ras Lanuf," rebel spokesman Shamsiddin Abdulmolah told AFP news agency, adding that the streets were littered with "an extraordinary number of anti-personnel mines".
The remnants of Col Gaddafi's troops in the town - believed to number about 150 to 200 - are holed up in industrial buildings with dwindling supplies, he added.
Rebel forces around Brega are being hampered by missile attacks from the village of Bishr around 20km (13 miles) away, Mr Abdulmolah said.
However, government spokesman Moussa Ibrahim later insisted that Brega remained under the "full control" of loyalist forces.
"They tried to recapture the town but were repulsed, losing 500 of their fighters in the battle," he told reporters in Tripoli.
"We will defend Brega to the last attack. We will turn Brega into hell - even if it causes the death of thousands of rebels we will not give up Brega," he added.
Correspondents say the fall of Brega would be a major breakthrough for anti-Gaddafi forces. For weeks the Libyan conflict has appeared to be in a protracted stalemate with rebels holding eastern Libya and pockets in the west.
Col Gaddafi remains entrenched in Tripoli, despite the Nato bombing campaign. Nato has been targeting Libyan government weapons and military facilities under a UN mandate issued in March to protect civilians.
'Need for democracy'
In a separate development on Monday, South Africa's President Jacob Zuma, who has led a mediation mission on behalf of the African Union, said that Libya needed a democratic government.
But he said that the Libyan people must decide their own destiny, and that if Col Gaddafi goes conditions must be in place as to when, where and how that happens.
Mr Zuma made his comments during a joint news conference in South Africa's capital, Pretoria, with the visiting British Prime Minister David Cameron.
Meanwhile, Russia has refused to recognise the rebel leadership as the legitimate government of Libya.
Russia's Foreign Minister Sergei Lavrov said that such a move would amount to taking sides in a civil war.
His statement comes a day after the US and other Western and Arab powers recognised the Libyan opposition as the country's "legitimate governing authority" and repeated their demand that Col Gaddafi and his family should give up power.
Nato aircraft have been targeting pro-Gaddafi forces near Brega in recent days, reporting hits on armoured vehicles and rocket launchers near the town, according to Reuters news agency.
Nato said its warplanes hit a military storage facility containing tanks, armoured personnel carriers and ammunition in Tripoli's eastern outskirts early on Sunday.
Col Gaddafi has refused to step down. In a speech on Saturday, he described the rebels as traitors and rejected suggestions that he was about to leave the country.