Government troops have recaptured the strategic town of Bir Ghanam, southwest of Tripoli, from rebel forces, Libyan Prime Minister Baghdadi Mahmudi told reporters on Sunday.
"Life is back to normal in Bir Ghanam, and today it is under the full control of the regime," Mahmudi said a day after rebels said they captured the town which lies just 80 kilometres (50 miles) from the capital.
Libyan rebels from the Berber-dominated Nafusa mountain range south of Tripoli claimed the capture of Bir Ghanam on Saturday as they pushed further east toward the capital.
An AFP correspondent on the scene said rebels from the Berber-dominated Nafusa mountains began a two-pronged assault from Bir Ayad earlier that day. By late afternoon, rebel commanders said Bir Ghanam was seized.
The rebels have been using the Nafusa as a springboard to advance on Tripoli but have encountered strong resistance from fighters loyal to Libyan leader Moamer Kadhafi.
Mahmudi also condemned the intensification of NATO raids on Tripoli and other cities, claiming that the alliance no longer "differentiates between civilian and military sites."
NATO said its warplanes attacked 45 targets across Libya on Saturday, including an ammunition storage facility and a multiple rocket launcher system in the Bir Ghanam area.
Mahmudi criticised the National Transitional Council (NTC), the rebels' de facto government, and the security situation in the rebel-controlled east, especially after last month's assassination of General Abdel Fatah Yunis, who was a long-time ally of Kadhafi before defecting.
The premier claimed that the "decision-making and the real forces in the field are in the hands of Islamist extremist groups."
Since the beginning of the revolt, the Kadhafi regime has portrayed the five-month-old uprising is an Al-Qaeda plot.
Mahmudi claimed that most NTC members had left the country, saying: "I defy the NTC to meet even once during Ramadan," the Muslim month of fasting.
On Saturday, hundreds of rebel fighters also forked off towards the sea, advancing within 20 kilometres of Surman on the coast road west of Tripoli before meeting any resistance, an AFP correspondent said.
Their path northward was veiled in black smoke and strewn with burned-out Libyan army vehicles, some with the bodies of soldiers inside, he said.
But forces loyal to the veteran Libyan strongman fought back, laying down fire in a bid to halt the rebels' advance.
Many of the rebels were from the "Tripoli Battalion," a group of volunteers from the capital and other coastal towns eager to "liberate" their homes in the five-month-old revolt.
The battalion is said to have received military training in the Nafusa mountains.