Forces loyal to Libyan leader Col Muammar Gaddafi have launched further air strikes on the rebel-held oil port of Ras Lanuf, in a renewed offensive.
Warplanes fired missiles on residential areas and near rebel positions.
Intense shelling and the deployment of heavy armour has been reported, but there were no reports of casualties.
Meanwhile, the rebels said they had been approached by pro-Gaddafi officials offering to hold talks on an exit for the Libyan leader.
Col Gaddafi has refused to cede power in the past, arguing that he has no official position and therefore it is impossible for him to resign.
A Libyan foreign ministry official described as “absolute nonsense” reports that Col Gaddafi had offered to stand down, the Reuters news agency reports.
The rebels believe the approaches are merely an attempt to divide the opposition, says the BBC’s Jon Leyne in the rebel stronghold of Benghazi.
Another member of the rebel council, Jalal al-Gallal, told the BBC: “To leave is one thing, but not to be prosecuted at a further date is not acceptable.”
There seems to be a division within the council, says the BBC’s Mustafa Menhshawi in Bengazi, with some saying talks are underway between Col Gaddafi and rebel leaders to secure his departure from the country, while others deny any negotiations are under way.
The confusion within the rebel leadership is obvious, adds our correspondent, suggesting the council is not fully linked to rebel forces on the ground.
Meanwhile, Yousef Shakir, an advisor to the Libyan cabinet, denied there had been any talks to secure a safe exit for Col Gaddafi.
“The Libyan Army has, for the first time, taken a decision to cleanse the Libyan cities from rebels,” he told the BBC. “The Army has already started in Libyan westen cities and will move to Benghazi.”
Col Gaddafi’s side believe they are making significant military gains, consolidating their hold on western Libya, says the BBC’s Wyre Davies in Tripoli.
In western Libya the opposition-held towns of Zawiyah and Misrata are said to still be under siege from government forces.
On Monday, pro-Gaddafi forces had retaken the town of Bin Jawad, on the road to Ras Lanuf, which the rebels captured late last week.
On Tuesday, using air strikes, helicopter gunships and heavy armaments, they pushed back a rebel advance along the north coast, and more accurate attacks than had been seen previously seemed aimed at dislodging opposition fighters from a crossroads outside Ras Lanuf.
Under these circumstances, it is difficult to see how the Gaddafi regime would be in any mood to compromise or talk about succession, our correspondent says.
Meanwhile, western powers are stepping up their efforts to put in place a no-fly zone over Libya.
Britain and France are drafting a UN resolution, which will be debated by Nato defence ministers on Thursday.
The Organisation of the Islamic Conference, which represents Muslim countries, has joined the calls for a no-fly zone. Gulf Arab states gave their backing to the idea, condemning the use of violence against civilians by Libyan government forces and calling for an urgent meeting of the Arab League.
An Arab League official said the group’s foreign ministers would meet on Saturday in Cairo to discuss the Libya crisis, reuters reported.
A no-fly zone would probably ban military flights by government forces through Libyan airspace. Any aircraft violating the exclusion zone would risk being shot down by international forces.
No-fly zones were imposed on southern and northern Iraq in the wake of the first Gulf war in 1991, and during the war in Bosnia in 1994-95.
However, our correspondent in Tripoli cautions that any foreign intervention would have to be carefully calculated, as it risks playing into Col Gaddafi’s hands.
The UN says more than 1,000 people have died and 200,000 have fled the violence in Libya, which is now in its third week.
Anti-Gaddafi rebels control most of the east of the country, centred around the city of Benghazi. However, the government has consolidated its hold on western areas and the capital, Tripoli, which is home to about a third of the population of 6.5 million.
The revolt against Col Gaddafi’s 41-year rule is now well into its third week.
It comes in the wake of uprisings in Tunisia and Egypt, whose presidents were forced from power after mass street demonstrations.
Anti-government protests have also taken place in Bahrain, Yemen, Algeria and Jordan. BBC
The rebels rejected the offer, a spokesman said.
Heavy shelling is reported.
The Libyan leader had not sent anyone himself, but lawyers from Tripoli had volunteered to act as go-betweens, former Justice Minister Mustafa Abdel Jalil, who heads the rebels’ Transitional National Council, told AFP.