Fighting raged around Libya's rebel stronghold of Benghazi on Saturday, with air strikes, shelling and anti-aircraft fire rocking the Mediterranean city as a war plane went down in flames.
Hundreds were seen fleeing the city eastwards amid unconfirmed reports that forces loyal to Libyan strongman Moamer Gaddafi had entered the western suburbs of the city of more than one million people.
Tank fire was also heard from the south of the city as rebel fighters ran through the streets flashing V for victory signs and crying "Allahu Akbar", or "God is greatest".
The southern edge of Benghazi early morning suffered at least two air strikes and sustained shelling, sending thick smoke into the sky, an AFP reporter said.
A warplane was seen coming came down in a residential area of Benghazi with flames emerging from the rear fuselage, triggering celebratory gunfire from the rebels.
The pilot ejected from the aircraft, which was identified as a Russian-built MiG-23 fighter as used by the Libyan air force. However a number of military units defected to the rebellion soon after the revolt broke out.
The two air strikes occurred within 20 minutes of each other, but the planes responsible could not be immediately identified.
A series of small explosions, possibly from Katyusha rockets, also produced at least seven smaller columns of black smoke south of the city.
The government for its part said its armed forces were under attack west of Benghazi and had responded in self-defence.
"The gangs of Al-Qaeda attacked the units of the Libyan armed forces stationed to the west of Benghazi," a statement carried by the official Jana news agency said, using Tripoli's term for the insurgents.
The statement accused the rebels of using "a helicopter and a fighter jet to bomb the Libyan armed forces in blatant violation of the no-fly zone imposed by the UN Security Council."
On Friday evening, residents of Benghazi had braced for an imminent attack, after reports strongman Moamer Gaddafi's troops were just 50 kilometres (30 miles) south of the city and planning an evening assault.
In Tripoli, Libya's deputy foreign minister had denied any plans to attack the rebel bastion and said the government forces would not breach the ceasefire.
"The armed forces are now located outside the city of Benghazi and we have no intention of entering Benghazi," Khaled Kaaim told reporters.
Kaaim also called for the immediate deployment of foreign observers, saying otherwise "the accusations and counter-accusations will not stop."
The air strikes came after the Libyan government said it was observing a ceasefire that it announced shortly after the United Nations voted to authorise use of force against Moamer Gaddafi's troops.
But the rebel forces who have been trying to overthrow the Libyan leader said his troops had continued to bombard cities, violating the ceasefire continuously since its declaration.
France was hosting Saturday what it said would be a "decisive" summit with the European Union, Arab League and African Union, as well as UN chief Ban Ki-moon, on taking UN-sanctioned military action in Libya.
France's ambassador to the United Nations, Gerard Araud, said he expected military intervention within hours of the summit.