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The military, loyal to Muammar Gaddafi, have cleared "armed gangs" from the oil-rich town of Brega in the east, Libyan state TV quoted unnamed army sources as saying today.
"Brega has been cleansed of armed gangs," it said, but the report could not be immediately confirmed.
The claim comes amid a string of setbacks for the rebels who lost several cities in the east to pro-Gaddafi forces. The pro-Gaddafi forces have been swiftly advancing on the rebels who had taken control of much of the eastern parts of the country, Al Zazeera channel said.
It said if the fall of Brega, just 240 kilometres west of Benghazi, is confirmed it would deal a serious blow to the opposition`s morale and momentum.
"Dozens of rebel fighters are pulling out of the area amid heavy shelling," BBC quoted witnesses as saying.
It said Gaddafi`s troops are on the outskirts of the Misrata, last major rebel base in western Libya, with tank fire being heard.
Troops loyal to Gaddafi on Saturday had pushed the front line miles deeper into rebel territory to just 40km outside Brega, the site of a major oil terminal, Al Zazeera said.
Amid the setbacks on the ground, the the morale of the rebels have been boosted by the Arab League`s support to the UNSC to impose a no-fly zone over Libya..
"The Arab League asks the United Nations to shoulder its responsibility ... to impose a no-fly zone over the movement of Libyan military planes and to create safe zones in the places vulnerable to air strikes," said the 22-member organisation in a statement yesterday.
The Arab bloc said the Gaddafi regime had "lost its sovereignty," pilling up pressure on the US and other Western nations to move fast on the plan to protect civilians from air attack by forces loyal to the embattled leader.
It also appeared to confer legitimacy on the rebels` interim government, the National Council, saying it would establish contacts with the group.
The Arab League`s approval for a `no-fly` zone is likely to encourage the US and its European allies to move ahead with enforcing the zone, which will effectively neutralise Gaddafi`s air power.
The UK and France have come out openly in support of the idea, but firm backing from the EU or Nato has been lacking so far.
Gaddafi`s forces have already reclaimed the rebel-held Zawahiya town and strategic oil port of Ras Lanuf, 40 kilometres west of Brega, Al Jazeera said.
"We have to remember that this is not an organised army. This is a group of teachers, engineers, street cleaners - people who have had no association with weapons whatsoever," it said.
