Forces loyal to Libya's new rulers said they were holding back on Thursday from advancing on Moamer Kadhafi's last redoubts despite their capture of two key southern oases.
The commander of NATO's Libya air campaign, Lieutenant General Charles Bouchard, said he was confident the mission could be completed "well within" three months after the alliance extended it for another 90 days.
Algeria, which has previously angered Libya's new rulers, announced Thursday it now recognised the National Transitional Council, while Tunisia jailed former Libyan premier Baghdadi al-Mahmudi for illegal entry.
Meanwhile a new regime official said oil production will resume soon but a return to pre-uprising production levels is still far off.
"We will return to production in the very next few days but exports will take longer," Mustafa el-Huni, who heads the economy, finance and oil commission at the National Transitional Council (NTC), said.
But he added that "resuming Libya's normal production of 1.6 million barrels of oil per day (bpd) is still far off."
Optimistic forecasts see a return to production levels existing before NTC fighters overran the Kadhafi regime taking six to nine months, Huni said, and a year according to pessimistic outlooks.
On the battlefront commanders said the new regime forces were Thursday in full control of all three main towns in the Al-Jufra oasis, a day after the capture of Libya's largest desert city, Sabha, in the deep south.
The defeat of Kadhafi loyalists in the Saharan oases left diehards in his hometown of Sirte and in the desert city of Bani Walid to its west effectively cut off from any line of escape to the south.
"Al-Jufra -- Hun, Waddan and Sokna -- is liberated," a military spokesman in Libya's third largest city Misrata said in a statement Thursday.
On Wednesday an NTC official said new regime forces had seized Waddan on Tuesday and took Hun the following day.
"Two of our fighters were wounded. There were 11 dead and 25 wounded among Kadhafi's men and we captured 14," said Kamal al-Hzifeh, the coordinator between the military command in Al-Jufra and the NTC.
"Sabha is totally free," said Suleiman Khalifa, spokesman of the town's local council. "Eighteen (NTC) fighters were killed during the final operation," he added.
Several key Kadhafi supporters fled to Niger from Sabha after it fell to new regime forces, NTC military spokesman Ahmed Omar Bani told a news conference on Thursday without elaborating.
In its operational update on Thursday, NATO said its warplanes had hit four anti-aircraft guns and a vehicle storage depot around Hun, and struck as well a command and control node and five surface-to-air missile systems in and around Sirte.
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NATO's operations commander said resistance among Kadhafi loyalists was now restricted to "only three isolated pockets" -- Sirte, Bani Walid and Al-Fugaha in the Al-Jufra region.
Bouchard added that Kadhafi forces "are no longer able to conduct coordinated operations throughout Libya," while the number of people at risk from pro-Kadhafi military action had fallen to about 200,000.
He said he had no idea where Kadhafi was, but stressed that the fugitive strongman continues to "give orders" and "entice regime forces" to act.
NTC commanders west of Sirte said they had been told to expect further NATO air strikes on Thursday and had orders not to advance.
East of Sirte, commanders said that they had postponed any offensive against the city for at least a week for want of ammunition after heavy fighting.
"Fighting has been stopped for a week. We are facing a shortage of ammunition," said Commander Mustafa bin Dardef of the Zintan Brigade, whose troops are some 25 kilometres (15 miles) east of Sirte.
He said he was heading to Benghazi to try to organise new supplies.
Meanwhile, troops loyal to the new regime would establish a "strong defensive line" around the town of Sultana, which they captured early on Monday and is now five kilometres behind the front line.
Medics at an NTC field hospital at a point called Kilometre 50, behind the front line, said one fighter had been killed and three wounded on the western side of Sirte on Thursday.
Meanwhile at the roundabout on the frontline on the edge of Sirte, two dozen NTC fighters were on standby in pick-up trucks, armed with anti-aircraft guns and other weapons. But they did not advance into Sirte.
Another new regime commander, Ahmed Zlitni, said the advancing troops were keen to avoid using heavy weapons against Sirte.
"We are still giving time for Sirte civilians to leave the city," Zlitni told AFP, as dozens of families were seen fleeing west of Sirte.
Mohammed bin Sirtiya, who arrived with his wife and eight children, said life in Sirte had become "unbearable."
Politically the NTC scored another point Thursday as Algeria, which had delayed recognition of the interim government, announced it now recognises the new rulers as Libya's legitimate leadership.
"The Algerian government declares its willingness to work closely with the new Libyan authorities to establish a bilateral cooperation to benefit the two brotherly nations and promote conditions of peace, security and stability in the region," the APS news agency reported.
In Tunis, a justice ministry ministry spokesman said Libya's former premier Mahmudi had been arrested on Wednesday and sentenced to six months in jail for illegal entry "with immediate effect."
The European Union, meanwhile, lifted sanctions on Libya in line with a UN decision, partially removing an arms embargo, unlocking frozen central bank and oil funds and letting Libyan aircraft use European runways.