Anti-Gaddafi forces took heavy losses as they pushed Wednesday towards the ousted despot's compound in his birthplace Sirte, while also being beaten back in his other remaining bastion, Bani Walid.
On the political front, a member of Libya's new ruling National Transitional Council (NTC) said formation of a transitional government, already delayed by disputes over power-sharing, had been postponed until they had won control of the entire country.
In a radio message, Muammar Gaddafi hailed the resistance put up in Bani Walid, where the NTC said four of their fighters were killed and 11 wounded in fierce clashes Tuesday with forces loyal to the toppled strongman.
The losses were heavier in Sirte, where NTC fighters are battling their way to the heart of the sprawling Mediterranean city, site of a Gaddafi compound and bunkers.
Fighting which raged into the night on Tuesday centred around the Mahari hotel in eastern Sirte where NTC combatants engaged loyalist troops in close quarter skirmishes, a commander said.
"More than 10 of our fighters have been killed today in face-to-face fighting near Mahari hotel," said the commander, who asked not to be named as the information was sensitive.
The NTC fighters and Gaddafi's diehards clashed "in street fights and shot at each other from close range with Kalashnikovs and rocket-propelled grenades," the commander said.
The NTC fighters had early on Tuesday captured Sirte's port, marking a key victory in the battle for control of Gaddafi's hometown.
But they expected a ferocious fight for control of the compound, the nerve centre of the remaining resistance where some of Gaddafi s family are thought to be holed up.
NTC fighter Fateh Marimri, who drove out of Sirte's eastern gate in what he said was a captured Gaddafi 4X4, reported heavy fighting around the Mahari hotel.
"They are using heavy weapons but we are not, as we want to cause minimum damage to civilians," Marimri told AFP.
"They are now fighting us in civilian clothes and there are African mercenaries everywhere in Sirte."
He also said Gaddafi's family members were inside Sirte, backed by a "large number of his forces", but did not give names.
Thousands of fearful civilians have been fleeing Sirte, 360 kilometres (225 miles) east of Tripoli, as the new regime's forces close in from the east, south and west.
Some said Gaddafi's forces had been trying to prevent people from leaving.
"There's no food, no electricity; we were eating just bread," Saraj al-Tuweish, who got out with his extended family on Tuesday, told AFP.
"I've been trying for 10 days to get out and every time the army forced us back.
"We would go the checkpoint and they would refuse, they would shoot in the air. Today we used a dirt road early in the morning and we managed to escape."
NATO said the plight of civilians is worsening by the day in Sirte and Bani Walid, with supplies running short and snipers preventing escape.
The populations of the two Gaddafi strongholds are "under enormous pressure" with access to drinking water, food, electricity, medicine and fuel "severely impeded," an alliance spokesman said.
"Media, eyewitness accounts and intelligence reports reveal the worsening situation in these two towns," Colonel Roland Lavoie said in Brussels.
In Gaddafi 's radio message, a transcript of which was carried by a loyalist website, he said he was still fighting and was ready to die a martyr.
"Heroes have resisted and fallen as martyrs and we too are awaiting martyrdom," Gaddafi said.
He praised the fierce resistance put up in Bani Walid, which had been a major recruiting ground for his elite army units.
"You should know that I am on the ground with you," he said. "Through your jihad, you are imitating the exploits of your ancestors."
NTC forces said the fierce resistance of Gaddafi loyalists had stalled their offensive in Bani Walid, a desert town 170 kilometres (100 miles) southeast of Tripoli.
"NTC fighters pulled out from some areas they control in Bani Walid due to the intensity of fire," said Abdallah Kenshil, the new government's chief negotiator in abortive efforts to broker the town's surrender.
In Benghazi, NTC member Mustafa al-Huni said Libya's new rulers had decided to postpone the formation of a transitional government until they had won control of the entire country.
On Saturday, NTC chief Mustafa Abdel Jalil acknowledged that "differences in views" between members of the NTC and the executive council had delayed a deal.