The warplanes swooped down on the town this morning, according to eyewitnesses, as the crucial meeting of the Arab League said it could consider enforcing a no-fly zone over Libya if the aerial attacks continued.
Continued efforts by the Libyan army backed by mercenaries to penetrate into the rebel-held east came, as US and NATO commanders cloaked their response to demands by the Libyan opposition to impose a no-fly zone, which will effectively ground Gaddafi`s fighter jets.
However, the rebels claimed that they had routed in an intense battle the forces loyal to 68-year-old Gaddafi who had launched a counter-offensive aimed at taking back lost territory in the country`s east. They said they were in total control of the oil terminal town of Brega.
The strike in Brega came a day after clashes between rebels and government troops left 14 people dead in the region.
About 300 men loyal to the Libyan leader attacked Brega, some 500 km east of the Gaddafi`s stronghold of Tripoli yesterday.
An air force bomber encircled the town, firing a missile without causing any casualties. The warplane struck a beach near a university campus where the two sides were fighting, Al-Jazeera reported.
It said the opposition managed to repel the strike, maintaining control of the town they seized a week ago.
Witnesses in the nearby Ajdabiyah town also reported fresh fighting.
A defiant Gaddafi has refused to give up power as he warned against any foreign intervention, saying it will lead to "a bloody war" in which "thousands of Libyans would die".
"We will not accept (an) American intervention. This will lead to a bloody war and thousands of Libyans will die if America and NATO enter Libya," he said at a public gathering for the first time since the two-week-old uprising began, an event aired live on state television last night.
Digging in his heels, he claimed that the anti-regime protests were part of a "conspiracy" to grab the oil resources of Libya.
"We will fight to the end, to the last man, the last woman ... with God`s help," he said while describing the protests as being orchestrated by only a minority who were being propped up by "foreign forces, foreign media".
The fresh battles could trigger an intense confrontation, with US Secretary of State Hillary Clinton warning that it could descend the Arab nation into a prolonged civil war unless the Arab strongman resigned.
Al-Jazeera said that towns of Gharyan and Sabratha had also switched sides after intense battles.
The Libyan opposition leaders said Gaddafi`s offensive was aimed at creating a buffer zone around the capital Tripoli where he is holed up.
They are pleading for foreign powers to launch air strikes to help them oust Gaddafi, who has ruled for 41 years.
An intense battle was also reported to be underway for the control of the town of Misruta, 200 kms east of Tripoli, where rebel forces were on the periphery of a major air base located on the outskirts of the town.
Amid growing global concerns over the violence in Libya, the Arab League announced yesterday that it could impose a "no fly" zone over the country if the fighting continued.
"The Arab countries cannot remain with their arms folded when the blood of the brotherly Libyan people is being shed," the League said in a resolution after a meeting of its Foreign Ministers here.
"The ministers have decided to pursue talks on the best way to protect Libya`s citizens and to assure their security, including the imposition of an aerial exclusion zone and coordination between the Arab League and the African Union on this subject," it said.
The Arab League last month barred Libya from its meetings until Gaddafi responds to the demands of protesters.
Secretary of State Hillary Clinton said in Washington that the US is "long way" from deciding whether to impose a no-fly zone over the strife-torn Libya.
Defence Secretary Robert Gates also said that enforcing a no-fly zone is doable but not without risk. "Well, if it`s ordered, we can do it. But the reality is...there`s a lot of, frankly, loose talk about some of these military options. And let`s just call a spade a spade," he said.
"A no-fly zone begins with an attack on Libya to destroy the air defences... And then you can fly planes around the country and not worry about our guys being shot down. But that`s the way it starts," Gates said.
"It requires more airplanes than you would find on a single aircraft carrier. It is a big operation in a big country," he told lawmakers.
However, the White House said that the no-fly zone is being actively considered along with other options.
Separately, the Netherlands said three of its marines had been captured by pro-Gaddafi forces. They had been helping to evacuate two European civilians when they were detained in the city of Sirte.