If the town of Ajdabiya falls, it would leave open the roads to the rebel headquarters city of Benghazi and the key northeastern port of Tobruk.
Qaddafi and rebels fight over Ajdabiya, gateway to Benghazi
Libyan leader Muammar Qaddafi's forces shelled rebel positions today on the doorstep of Ajdabiya, a key town which the revolution against his rule has promised to defend at all costs.
Colonel Qaddafi's forces have won a string of victories in recent days and if the gateway town of Ajdabiya falls it would leave open the roads to the rebel headquarters city of Benghazi and the key northeastern port of Tobruk.
As the leaders of the world's great powers met in Paris as the G8 to discuss possible military action in support of the rebellion, the regime's troops were pushing eastwards, slowly choking off rebel held territory.
In Ajdabiya, a thick sandstorm limited the effects of the army's air power, but rebel fighters on the exposed western edge of the small town said four shells had fallen six kilometres west of their position.
AFP journalists saw two craters of some four metres across and five metres apart near a road junction. Rebels said there had been no casualties, but urged the West to impose a no-fly zone to protect them from air strikes.
Jamal Mansur, a former air force colonel turned rebel field commander, said Libya's Russian-built Sukhoi-24 attack aircraft had carried out strikes, and that bombardments had targeted military buildings in Ajdabiya.
Mr Mansur also claimed some fighters are still holding out in Brega, 80 kilometres to the west, which the Libyan army said had been captured Sunday, but that this small pocket of resistance was increasingly beleaguered.
"Qaddafi's forces are practising a scorched earth policy but our forces regained a foothold in Brega last night," he claimed. "They are still there but are undergoing intense attacks by artillery and from the navy."
Mr Mansur was speaking in a rebel forward headquarters in Ajdabiya, a school in the town centre surrounded by truck-mounted anti-aircraft batteries pointing skyward and manned by former soldiers and revolutionary volunteers.
As the sandstorm blew over the area, dozens of civilians were evacuating the town, heading northeast for the rebel capital of Benghazi aboard light trucks loaded with suitcases, bags and mattresses.
The overall rebel military commander, General Abdel Fatah Yunis, who resigned as Col Qaddafi's interior minister soon after the uprising began in mid-February, said on Sunday that Ajdabiya was "a vital city" and key to his defence plan.
"It's on the route to the east, to Benghazi and to Tobruk and also to the south. Ajdabiya's defence is very important. We will defend it," he told reporters in Benghazi, the rebellion's headquarters.
The lightly-armed rebels have been pushed back at least 200 kilometres by superior forces in recent days, retreating from the coastal towns of Ras Lanuf and Brega in quick succession under heavy shelling and air attacks.
Colonel Qaddafi's regime has insisted its eastward drive will "purge" eastern Libya of the rebellion, which erupted against his autocratic rule on February 17 in the wake of similar uprisings in Tunisia and Egypt.
One young rebel in Ajdabiya, an armed volunteer named Fathalla, who joined the fighting 10 days ago, said fighting was continuing in Brega. "There's no front line, but we still have people there," he said.
From Ajdabiya one road runs north along the coast to Benghazi, Libya's second city, with a population of one million. Another crosses the desert to the oil port of Tobruk, which gives rebels control up to the Egyptian border.
Mr Mansur warned that Ajdabiya could become "another Zawiyah," referring to the town just outside Colonel Qaddafi's capital, Tripoli, which was recaptured by the regime's troops last week after bitter and deadly fighting.
The commander admitted the rebels were seriously ill-equipped and warned that they could be forced to turn to urban guerrilla warfare.
Mr Mansur said Qaddafi loyalists "have spies with technology we don't possess."
"They can buy informers thanks to their money, while we are very limited logistically. We are asking the West to carry out targeted strikes on military installations to ease the grip" of Tripoli, he said.
French officials have suggested the international community could launch surgical airstrikes and impose a no-fly zone over Libya, but other powers including the United States are reluctant to be drawn into the fighting.