Sixteen rebel fighters have been killed and another 126 wounded in two days of fighting for control of Zliten, the last coastal city between insurgent-held Misrata and the capital, rebels said Friday.
The news came amid reports rebels had infiltrated Tripoli and as strongman Moamer Kadhafi again ruled out talks with them -- even as they boast gains in the east and in the west -- saying theirs is a "lost cause."
And in Madrid, Spanish Prime Minister Jose Luis Rodriguez Zapatero urged the rebel National Transitional Council to start preparing for a "new political era," in a meeting with senior NTC figure Mahmud Jibril.
"Sixteen of our fighters have fallen as martyrs and 126 more have been wounded in fighting with loyalist troops in Zliten," said a rebel statement, with clashes said to be particularly heavy in the suburb of Souk al-Thulatha.
The insurgents have been trying for several weeks to take Zliten, 200 kilometres (120 miles) from the capital.
An AFP correspondent among a group of foreign journalists taken on an escorted tour of Zliten reported loud explosions Thursday on the front line just to the east.
Columns of smoke were clearly visible from the town, 40 kilometres west of Misrata.
The rebels say they have chased the bulk of Kadhafi's forces from Brega in the east and are poised for advances towards the capital from Misrata and their other western enclave in the Nafusa Mountains, southwest of Tripoli.
The Nafusa campaign is focused on taking Asabah, gateway to the garrison town of Gharyan on the highway into Tripoli.
An AFP correspondent embedded with rebels in Bir Ayad, in the plains below the mountains, said heavy winds on Thursday night and Friday brought exchanges of rocket fire to a halt.
A rebel commander, Nasser al-Aaib, said Kadhafi troops "are not moving because they don't know the terrain; they are afraid of being ambushed by the rebels, who know every inch of it."
Before the storm began on Thursday night, Aaib said Kadhafi forces bombarded a rebel checkpoint a few hundred metres (yards) from the loyalist-held town of Bir Al-Ghanam. At least four rebel fighters were wounded, one seriously.
In a speech aired by state television late on Thursday, Kadhafi called the rebels' five-month-old uprising a "lost cause."
"The battle has been decided. It has been decided in favour of the masses and the people," he said.
"They cannot defeat us. They will be defeated and they will go home empty-handed.
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"I will not talk to them. There will be no negotiations between me and them."
In a second speech aired by the channel, Kadhafi called on tribal leaders from Misrata, one of two rebel-held enclaves in the west, to "march on the city to liberate it."
The rebels said they had infiltrated armed and trained operatives into Tripoli to conduct missions against loyalist targets.
"There are small groups, they are good fighters, trained in Benghazi," commander Fawzi Bukatif told reporters in the rebel bastion on Thursday.
"We have supplied them with weapons and grenades."
Since the revolution began in February, a number of Tripoli-based groups have broadcast videos purporting to show acts of civil disobedience in the heavily controlled capital.
But the revelation that rebels have infiltrated Kadhafi's stronghold raises the spectre of more serious acts of sabotage.
On Thursday, unconfirmed rumours swirled that rebels in Tripoli had tried to assassinate senior regime members that day.
Bukatif said he had no knowledge of any such operation but added: "We expect things like that to happen."
In Madrid, Zapatero "encouraged (Jibril) to strengthen his organisation and his operations so it is in a position to successfully address the new political era that Libya will have to confront," according to his office.
"The internal reconciliation process and the process of constructing a new, stable, prosperous, sovereign and democratic society will be one of the key tasks of the future," he said.
Elsewhere, French Foreign Minister Alain Juppe is to travel to London on Monday for talks with British counterpart William Hague expected to be dominated by Libya, his ministry said.
The allies are demanding Kadhafi leave power before ending their military operations.
In Pretoria, meanwhile, a spokesman said South African President Jacob Zuma had discussed Libya by telephone with his Chinese counterpart, Hu Jintao, about African Union peace proposals which were "well received" by the latter.
Zuma is part of the AU team trying to broker a peace deal, proposing a ceasefire and negotiations on democratic reforms, with provision for a multinational peacekeeping force organised by the United Nations.