Libya conflict: 'Battle under way' for Bani Walid
Anti-Gaddafi forces in Libya say they are close to capturing Bani Walid, one of only four towns still under the control of loyalist fighters.
Commanders said they were within two kilometres of the centre. They said they had no choice but to go in after coming under attack.
Bani Walid and the other loyalist-held towns have been given until Saturday to surrender to the interim government.
There has also been fierce fighting near the Gaddafi-held city of Sirte.
The anti-Gaddafi forces near Bani Walid said they had made quick progress so far, but that they were not engaging in a full military assault as they still wanted to minimise casualties.
They said four people had so far been killed, including three pro-Gaddafi fighters, and a number of people had been injured.
The BBC's Richard Galpin near Bani Walid says there have been reports of hand-to-hand combat with what have been described as professional fighters on the Gaddafi side - but also reports that some had been throwing away their weapons as the anti-Gaddafi forces approached.
Abdallah Kanshil, a senior official from the interim Libyan leadership, the National Transitional Council (NTC), told Reuters: "[Anti-Gaddafi] fighters are in the north of the city fighting snipers, we have also entered from the east."
Earlier in the day, there were reports of a barrage of Grad missiles being fired from the town by pro-Gaddafi forces.
The NTC says it has been trying to negotiate a peaceful resolution to stand-offs in Gaddafi-held Bani Walid, Jufra, Sabha and Sirte, but Prime Minister Mahmoud Jibril had warned NTC troops would respond if attacked.
NTC forces have also been preparing munitions near Sirte.
There was a heavy exchange of fire about 60km east of the city, in the Red Valley region which the NTC announced it had captured on Thursday.
The BBC's Paul Wood, with the anti-Gaddafi forces near Sirte, witnessed the incoming rocket and mortar fire from loyalist forces.
He says the rebels fired back with anti-aircraft guns, but they are still a long way from the city.
The anti-Gaddafi forces told him they will keep pushing forward and although Sirte may not fall according to their leaders' timetable, they are sure that it will fall.
AFP news agency said the arrival of 10 pro-Gaddafi vehicles on the frontline had sparked two hours of heavy fighting, but that the NTC troops held their position.
Meanwhile in Tripoli, tens of thousands of people on Friday took part in a march to remember those who were killed by Col Gaddafi's forces near the eastern district of Tajoura on 25 February during the early phase of the Libyan uprising.
The BBC's Peter Biles in the Libyan capital says it turned into a huge victory parade, with residents all waving the red, black and green flag of the new Libya and clogging both sides of the main road with their vehicles.
In New York, UN Secretary General Ban Ki-moon has called on the UN Security Council to establish a new mission in Libya for an initial period of three months.
The mission would be tasked with helping Libyans organise elections, give advice on the judicial system and help develop an effective police force.
Diplomats hope to approve a resolution on the new UN mandate by the end of next week.
Separately on Friday, Ali Kana, a senior general in Col Gaddafi's forces who commanded troops in the south, was reported to have fled to Niger.
Officials in the town of Agadez said a convoy of at least three vehicles carrying a dozen people, including Gen Kana, had arrived.
Several convoys of former loyalists are said to have streamed over the border with Niger over the past few weeks.
A number of Col Gaddafi's aides - including his chief of security Mansour Daw - have reached the capital, Niamey.
Officials in Niger, which recently installed democracy after decades of authoritarianism, said they were letting in many sub-Saharan Africans from Libya on humanitarian grounds.
However, the head of President Mahamadou Issoufou's cabinet, Massaoudou Hassoumi, said on Friday it would respect its commitments to the International Criminal Court (ICC) if Col Gaddafi or his sons entered the country.
The ICC has issued a warrant for crimes against humanity against Col Gaddafi, his son Saif al-Islam and spy chief Abdullah al-Sanussi.
Interpol on Friday issued an arrest warrant for the three.