Eighteen days after the uprising against Gaddafi`s 41-year rule began, extremely heavy gunfire could be heard in the capital Tripoli before dawn today.
The gunfire in Tripoli began at about 0545 local time (0915 IST), BBC reported. The machine-gun and heavy weapons fire could be heard across the city.
Some reports quoted government officials as saying that the firing was celebratory, while some others quoted residents as saying that it appeared to be fighting and not celebration.
Anti-Gaddafi rebels have taken much of the country in the over two-week revolt and have repeatedly denied government claims they have lost towns.
In an interview to French newspaper Le Journal du Dimanche, Gaddafi said he wanted the UN or the African Union to probe the Libyan crisis.
"I want an investigation team of the UN or the African Union in Libya. We will allow the commission to go on the field without any hindrance," he said.
Gaddafi said he favoured France "coordinating and leading" the investigative body. "France should have been the first to send a commission of inquiry. I hope that it will change its attitude towards us," he said.
68-year-old Gaddafi warned that the unrest in Libya would have serious consequences for Europe. "Thousands of people will invade Europe from Libya. And there will be nobody to stop them."
He also claimed that al-Qaeda was behind the protests against his regime. "There will be an Islamic Jihad in front of you, in the Mediterranean ... People of (Osama) bin Laden will impose ransom on land and sea... This will really be a global emergency and a disaster for everybody," he told the paper.
"They will attack the US Sixth Fleet. There will be acts of piracy here at your gates, about 50 kilometres from your borders," he was quoted as saying.
Separately, Gaddafi was quoted as saying by London`s `The Sunday Times` that he would not leave his hometown to live abroad in exile.
On efforts by British Premier David Cameron and other Western powers to freeze his family`s assets, he was quoted as saying: "I challenge Cameron and everybody else if he can bring one dinar that belongs to me in any foreign bank."
Libyan state TV said that troops loyal to Gaddafi have made significant gains against rebel forces. They included the towns of Zawiya, Ras Lanuf, Misrata and even Tobruk in the far east.
Residents of Zawiya, 50 km west of Tripoli, were quoted as saying yesterday that Gaddafi`s troops had fired indiscriminately on civilians as they attempted to capture the town.
In the east, the rebels said they were advancing westwards on Sirte, the heavily-defended hometown of Gaddafi, according to BBC.
After taking the oil terminal port of Ras Lanuf in heavy fighting on Friday, rebel forces had entered the town of Bin Jawad, 160 kms from Sirte.
The fighting and explosions yesterday in the rebel-held territory had claimed 74 lives in Libya, where the UN says more than 1,000 people have died since the revolt began in mid-February.
Rebels said that they had formed local councils in cities they control in the eastern region with an aim to lead the nation into elections, local media reports said.
As ding-dong heavy battles continued across the country, the US and NATO warships and fighters were positioned off the strife-torn country`s coast.
US President Barack Obama has said that their primary mission is to undertake humanitarian evacuation, "but all options are on the table."