Libyan rebels are retreating from the strategic town of Ajdabiya under heavy bombardment by Muammar Gaddafi's forces, according to reports, as the international community continues to debate a possible no-fly zone to protect an anti-government uprising.

The town on Libya's east coast is all that stands between the advance of Libyan government troops and the rebel stronghold of Benghazi and lies on a road junction from where Gaddafi's forces could attempt to encircle the city.

Libyan state television claimed on Tuesday pro-Gaddafi forces were now "in total control" of the town. However, rebel fighters told Al Jazeera that Ajdabiya is still under their control.

Meanwhile, Gaddafi's forces, who have halted and reversed last month's rebel advance along the east coast, also appear to be gaining control of the nearby oil town of Brega.

Loosely organised anti-Gaddafi fighters with little military training have been pushed back more than 160km in a week-long counter-offensive by Gaddafi's professional army.

"We have lost Brega completely. We could not face Gaddafi's forces," said a rebel now in Ajdabiya who identified himself only as Nasser.
   
Battle lines around Ajdabiya, which has a population of 100,000, and Brega have moved back and forth several times in three days of heavy fighting.

In Ajdabiya, government jets opened up with rocket fire targeting a checkpoint at the western entrance to the town, forcing rebels back, then unleashed an artillery bombardment on the position and a nearby arms dump.

"They are bombarding the arms dump with land-based weapons. It is a really heavy bombardment," said civilian rebel supporter Ashraf Abdel Malik.  "If they hit the arms cache it will destroy Ajdabiyah."
   
As well as the coastal road to Benghazi, there is also a 400km desert road straight to rebel-held Tobruk, near the Egyptian border that would cut off the country's second city.

But it was not clear whether Gaddafi's forces were strong enough to divide up, and whether they could operate with such long supply lines.
   
Gaddafi's planes, tanks and artillery have had few problems picking off lightly armed rebels in the open desert, but have faced fierce resistance in towns that offer some cover for the rebels.
   
In a foretaste of the ferocity and chaos of urban fighting which could envelop Benghazi, a city of 670,000, Brega, with a population of just 4,300, has changed hands several times.
   
Soliman Bouchuiguir, president of the Libyan League for Human Rights, said in Geneva that if Gaddafi's forces attacked Benghazi, there would be "a real bloodbath, a massacre like we saw in Rwanda".
   
'Dire consequences'
   
Foreign ministers from the Group of Eight countries meeting in Paris fell short of agreeing to press the UN Security Council to back a no-fly zone to protect Libyan cities from aerial bombardment.

Instead, the G8 said Libyans have a right to democracy and warned Gaddafi he faced "dire consequences" if he ignored his people's rights. The G8 urged the Security Council to increase pressure on Gaddafi, including further economic measures.
   
Nicolas Sarkozy, the French president, and Britain have led calls to impose a no-fly zone. But Gaddafi has dismissed the threat of international intervention.
   
"We will fight and win. A situation of that type will only serve to unite the Libyan people," he told the Italian daily Il Giornale. Sarkozy, he said, has "a mental disorder".
   
At the G8, Russia and Germany argued a no-fly zone could be counterproductive, while the United States still remains cautious over the idea.
   
William Hague, the British foreign secretary, said: "We want to increase the pressure on Gaddafi, tighten sanctions. There is common ground here in the G8 and while not every nation sees eye-to-eye on issues such as the no-fly zone, there is a common appetite to increase the pressure on Gaddafi."
    
'Indiscriminate force'
   
As the diplomatic debate continues, there is now a real possibility that by the time world powers agree on a response to the conflict, Gaddafi's forces will already have won.
   
NATO has set three conditions for it to enforce a no-fly zone over Libya; regional support, proof its help is needed and a Security Council resolution.

An Arab League call for a no-fly zone satisfies the first condition, but with access to most of Libya barred by Gaddafi's security forces, hard evidence that NATO intervention is needed to avert atrocities or a humanitarian disaster is scarce.

Kyung-wha Kang, the UN Deputy High Commissioner for Human Rights, said Gaddafi's government had "chosen to attack civilians with massive, indiscriminate force".
   
In Misurata, the last major city in western Libya still in rebel hands, residents said water had been cut off to the city of 300,000 people, 200km east of Tripoli.
   
Pro-Gaddafi forces took control of the small town of Zuwarah, west of Tripoli, late on Monday after sending in tanks.
   
A resident in Zuwarah said that on Tuesday security forces were trying to round up anyone suspected of links to the rebels.
   
"They have lists of names and are looking for the rebels. They also took a number of rebels as hostages," said the resident who did not want to be named.
   
Libyan state television said the people of Zuwarah "came out in mass demonstrations" in support of Gaddafi on Tuesday.