Anti-Kadhafi fighters launched an all-out assault on Wednesday against the ousted strongman's remaining holdouts, now pinned into a small corner of his hometown Sirte.
The fighting was concentrated in the outer streets of Sirte's Number Two neighbourhood, with both sides trading heavy gunfire and bombarding each other with mortar shells.
Ali al-Rikabi, field commander of the National Transitional Council (NTC), Libya's new rulers, said fighting was raging in "four or five streets of the neighbourhood."
"It is intense and we have exchanges of gunfire," he said, as an AFP reporter saw wounded NTC fighters being hurried out towards a field hospital.
Medics at a field hospital in east Sirte said seven fighters were killed and 74 wounded. Two other fighters were reported wounded on the western side of the city.
At least 11 NTC fighters were killed and 95 wounded on Tuesday alone in the battle to subdue the last pockets of support for Moamer Kadhafi in Sirte, according to medics.
NTC chief Mustafa Abdel Jalil said, meanwhile, that Libya's new rulers will compensate the fighters who helped overthrow Kadhafi, the wounded and the families of the martyrs.
"Families of the martyrs, the wounded and the fighters themselves will be compensated," he said in Benghazi, urging Libyans to be patient, however, because of lack of funds.
The popular uprising that erupted in mid-February to topple Kadhafi has claimed more than 25,000 lives, according to the NTC.
According to Essam Baghhar, a field commander from the Zintan Brigade, only Sirte's Number Two neighbourhood in was still being held by Kadhafi's forces after NTC fighters overran the adjoining Dollar district late on Tuesday.
"The Dollar neighbourhood was liberated last night and now the fight is in Number Two neighbourhood," Baghhar said. Loyalist forces had been pushed into an area of Number Two less than one square kilometre (0.4 square mile) in size.
"We have captured many snipers in the past two days, including two women snipers," he said.
An NTC fighter, Atallah Zein, expanded on the dangers posed by snipers in Number Two district.
"There is a sniper in practically every house. Sometimes the civilians who are still staying in the neighbourhood are cheating us," he said.
"They get out of their houses showing a white flag and then from behind them the snipers shoot at us and we can't return fire because we see only civilians."
Another fighter, who gave his name only as Walid, said NTC forces had captured a weapons store of pro-Kadhafi fighters.
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"This will drain them of their supplies of arms and ammunition," he said, adding that the fighting was still intense.
Sirte once had 100,000 inhabitants, almost all of whom have fled, while fierce artillery battles and heavy gunfire over the past month have not left a single building intact, while looting has become commonplace.
Among those killed on Tuesday was Mustafa bin Dardef, a popular field commander with the Zintan Brigade, who was hit by a mortar round. A businessman in Benghazi before he joined the uprising, he leaves a son and four daughters.
Kadhafi was toppled in August when NTC fighters overran his headquarters in the capital Tripoli.
He has since gone into hiding, with some NTC officials believing he could be in Sirte, while most think he has gone into hiding in Libya's vast southern deserts.
NTC leaders have said that once Sirte is fully under their control they will declare Libya free of Kadhafi's 42-year autocratic rule and set about forming an interim authority ahead of elections.
In the desert oasis of Bani Walid, 170 kilometres (100 miles) southeast of Tripoli, the red, black and green flag of the new government was raised after the only other remaining holdout was captured on Monday.
NTC forces Tuesday paraded through the streets in armed pick-up trucks and filled the central square, letting off deafening bursts of celebratory machine-gun fire.
NATO said it was not yet ready to end to its mission over Libya despite the advances made by NTC forces.
"It is premature to set a timetable now," NATO spokeswoman Carmen Romero said in Brussels. "We are very close to the end, but there are still threats to the civilian population."
Meanwhile workers at Libya's Waha Oil Company demonstrated in Tripoli, demanding the resignation of boss Bashir al-Ashhab for alleged corruption and ties to the old regime, saying his refusal to quit was costing $36 million a day.
Around 100 people gathered outside the prime minister's office holding placards and chanting "Waha needs a change!" and "Ashhab, take your chair and get out!"
Waha is the country's largest joint venture oil company, a partnership between the state-run National Oil Corporation and US firms ConocoPhillips, Hess and Marathon.
It has a production capacity of more than 350,000 barrels per day but output has been suspended since late February.
On the diplomatic front, British Foreign Secretary William Hague said on a visit to Algeria that Libya's neighbour should cooperate with the new regime over Kadhafi family members who took refuge there.
His daughter Aisha fled to Algeria in late August with her brother Hannibal, their mother Safiya -- Kadhafi's second wife -- and his eldest son Mohammed.