Muammar al-Qaddafi's forces stormed the western rebel outpost of Misrata with tanks and artillery on Friday, a rebel spokesman said, while insurgents marshalled defences in their eastern heartland.

A rebel leader speaking after talks with a U.N. envoy in Benghazi offered a ceasefire on condition Qaddafi left Libya and his forces withdrew from cities now under government control. It was unclear if the offer was part of broader diplomatic moves to end a conflict that appears deadlocked on the military front.

Rebels speaking from Misrata said Qaddafi's forces had brought their superior firepower to bear on the insurgents' last western enclave with an intense bombardment.

They used tanks, rocket-propelled grenades, mortar rounds and other projectiles to hit the city today. It was random and very intense bombardment," the spokesman, called Sami, told Reuters by telephone. "We no longer recognise the place. The destruction cannot be described."

"The pro-Qaddafi soldiers who made it inside the city through Tripoli Street are pillaging the place, the shops, even homes, and destroying everything in the process."

"They are targeting everyone, including civilians' homes. I dont know what to say, may Allah help us," he said.

The account from Misrata, Libya's third biggest city 200 km (130 miles) east of Tripoli, could not be verified. Authorities do not allow journalists to report freely from the city.

A doctor in Misrata told Reuters in an email that the 32nd Brigade, one of the best-equipped and trained units, had been sent early on Friday to seize control of the city.

"So the question is where is the international community?" the doctor said.

CHECKPOINTS

Qaddafi, who has ruled Libya since taking power in a coup in 1969, describes the rebels as terrorists and Western agents. He accuses NATO led air forces, operating under a U.N. mandate, of killing huge numbers of civilians in bombing raids.

Civilian deaths haunt the calculations of coalition governments. Any sign of mounting casualties could shatter a fragile consensus between Western and Arab capitals who first called for creation of a militarily enforced no-fly zone.

BBC television quoted a Libyan doctor as saying a coalition air strike had killed seven civilians, mostly children, and wounded another 25 near the oil town of Brega on Wednesday.

The doctor said he had been called to a village 15 km (9 miles) from Brega after the strike hit a pro-Qaddafi military convoy. A trailer containing ammunition exploded between two homes, killing girls and young men aged between 12 and 20, the BBC said on Friday. The report has not been confirmed.

Libyan rebels moved heavier weaponry towards government forces at the eastern oil town of Brega on Friday and sought to marshal rag-tag units into a more disciplined force to fend off Qaddafi's regular army and turn the tide of recent events.

Rebels said neither side could claim control of Brega, one of a string of oil towns along the Mediterranean coast that have been taken and retaken by each side in recent weeks.

But there were signs on Friday of a more ordered approach. Rebels said more trained officers were at the front, heavier rockets were seen moving towards Ajdabiyah late on Thursday and the checkpoint was screening those going through.

"Only those who have large weapons are being allowed through. Civilians without weapons are prohibited," said Ahmed Zaitoun, one of the rebel fighters and part of a brigade of civilian volunteers who have received more training than most.

"Today we have officers coming with us. Before we went alone," he said, and he pointed to a man complaining at being stopped at the checkpoint, adding: "He is a young boy and he doesn't have a gun. What will he do up there?"

The new approach has yet to be tested after the rout rebels sustained this week when a two-day rebel advance forward along about 200 km (125 miles) of coast west from Brega was repulsed and turned into a rapid retreat over the following two days.

On the road between Ajdabiyah and Benghazi, gun emplacements were set up in freshly dug ditches with sand berms facing toward Ajdabiyah and the front line, the first sign of organised defensive positions protecting the rebel 'capital'.

RAPID RETREAT

Overnight, Qaddafi supporters danced and chanted patriotic songs around his compound as soldiers manning anti-aircraft guns watched the sky over Tripoli from the back of pickup trucks.

"We are not afraid, not afraid, not afraid. We will always protect our leader. I want to say to Muammar Qaddafi: I love you so much!" said Zuhra, a teenage girl at the rally.

Long ostracised by the West and denounced in 1986 by then- President Ronald Reagan as "this mad dog of the Middle East" for his backing of guerrilla movements, he had cultivated better ties in recent years, opening Libya to Western oil investment.

But Qaddafi's crackdown on popular protests spreading from elsewhere in the Middle East raised alarm in the Arab world as well as the West, prompting a U.N. resolution permitting military action to protect civilians and enforce a no-fly zone.

While Western action has failed to bring any end to fighting or quick collapse of Qaddafi's administration, signs have emerged of secret contacts between Tripoli and Western capitals.

Foreign minister Moussa Koussa defected in London this week. A Qaddafi appointee also declined to take up his post as U.N. ambassador, condemning the "spilling of blood" in Libya. Other reports of defections are unconfirmed.

A British government source said Mohammed Ismail, an aide to Qaddafi's son Saif al-Islam, had been visiting family members in London, but that Britain had "taken the opportunity to send some very strong messages about the Qaddafi regime."

Mustafa Abdel Jalil, head of the national council in the rebel stronghold of Benghazi, told journalists after meeting U.N. special envoy Abdelilah al-Khatibset in Benghazi:

"We have no objection to a ceasefire but on condition that Libyans in western cities have full freedom in expression their views...Our main demand is the departure of Muammar Qaddafi and his sons from Libya. This is a demand we will not go back on."

The United States, France and Britain, which have led air strikes, have talked about the possibility of arming the rebels. There have also been revelations U.S. President Barack Obama signed a secret order authorising covert U.S. support. 

Asked if he had seen any covert Western operatives at the front line with rebels, Zaitoun said: "I wish. They have great technology. They would have useful guidance for us. I have heard many things but I haven't seen anything yet."

The top U.S. military officer said Qaddafi's forces were not close to collapse. "We have actually fairly seriously degraded his military capabilities," Admiral Mike Mullen said. "That does not mean he's about to break from a military standpoint."

U.S. government sources told Reuters U.S. intelligence operatives were on the ground in Libya before Obama signed the order, to contact opponents of Qaddafi and assess their capabilities. There has been no CIA comment.

"I can't speak to any CIA activities but I will tell you that the president has been quite clear that in terms of the United States military there will be no boots on the ground," U.S. Defense Secretary Robert Gates said.