Libyan leader Moamer Gaddafi's son warned on Monday that the country faces a bloody civil war if protesters refuse to accept reform offers, in a speech broadcast as gunfire rang out in the capital.
Saif al-Islam Gaddafi condemned the unprecedented uprising against his father's 41-year rule as a foreign plot, but admitted mistakes were made in a brutal crackdown and urged citizens to build a "new Libya".
"Libya is at a crossroads. If we do not agree today on reforms, we will not be mourning 84 people, but thousands of deaths, and rivers of blood will run through Libya," he said.
Gaddafi's son gave a lower toll than the United States and rights watchdogs who said that hundreds are feared dead in an offensive to crush the uprising carried out by the military, reportedly backed by mercenaries.
Heavy gunfire broke out in central Tripoli and several city areas on Monday for the first time since the anti-regime uprising began, witnesses and an AFP journalist reported.
A witness in the working-class Gurgi area said security forces fired tear gas to disperse protesters. But confusion prevailed in the city after Gaddafi's speech and unconfirmed rumours that his father had left Libya triggered sounds of celebration, with women ululating and drivers hooting their car horns.
According to Human Rights Watch, at least 173 people have died in Libya since the anti-regime protests broke out on February 15 after similar uprisings in Tunisia and Egypt which ended the long rule of two veteran leaders.
The unrest has spread from the flashpoint city of Benghazi, where demonstrations began on Tuesday, to the Mediterranean town of Misrata, just 200 kilometres (120 miles) from Tripoli.
"This is an opposition movement, a separatist movement which threatens the unity of Libya," Gaddafi said in a fiery but rambling speech which blamed Arab and African elements for fomenting the troubles.
"We will take up arms... we will fight to the last bullet," he said. "We will destroy seditious elements. If everybody is armed, it is civil war, we will kill each other."
"Libya is not Egypt, it is not Tunisia," he said, adding that attempts at another "Facebook revolution" would be resisted.
But Saif al-Islam Gaddafi's threats betrayed a note of desperation, and he suggested that the eastern city of Benghazi, Libya's second city, was now out of government control.
"At this moment there are tanks being driven by civilians in Benghazi," he said, insisting the uprising was aimed at installing Islamist rule and that it would be ruthlessly crushed.
And despite the tough talk and finger-wagging, Gaddafi also made some concessions -- pledging a new constitution and new liberal laws with more media freedom.
"If you want us to change the flag and national anthem, we will." He also admitted "mistakes" on the part of the army in containing the riots, saying they were "not trained to contain riots" and were responding to attacks by "people on drugs."
In a performance which veered between threats and concessions, Gaddafi underscored Libya's vast oil wealth and issued a trenchant warning to foreign companies.
"We have one resource that we live on and that is petrol," he said. "All the foreign companies will be forced to leave the country."
Prime Minister Baghdadi Mahmudi meanwhile told EU ambassadors in Tripoli that there are "very precise plans, destructive and terrorist, that want Libya to become a base for terrorism."
But in a significant crack in the regime's public face, Libya's envoy to the 22-member Arab League announced he was "joining the revolution."
"I have submitted my resignation in protest against the acts of repression and violence against demonstrators and I am joining the ranks of the revolution," Abdel Moneim al-Honi said.
In Benghazi, which has borne the brunt of the violence, protests continued, lawyer Mohammed al-Mughrabi told AFP by telephone.
"Lawyers are demonstrating outside the Northern Benghazi court; there are thousands here. We have called it Tahrir Square Two," he said of the Cairo square central to protests that brought down Egyptian president Hosni Mubarak.
Winesses told AFP by telephone that security forces also clashed with anti-regime protesters in Misrata, saying security forces, backed by "African mercenaries," fired on crowds "without discrimination."
The United States and the European Union strongly condemned the use of lethal force in Libya. "We are working to ascertain the facts, but we have received multiple credible reports that hundreds of people have been killed and injured in several days of unrest -- and the full extent of the death toll is unknown due to the lack of access of international media and human rights organisations," US State Department spokesman Philip Crowley said.
EU foreign policy chief Catherine Ashton urged Tripoli to open a dialogue with protesters. "The legitimate aspirations and demands of the people for reform must be addressed through open and meaningful Libyan-led dialogue," Ashton said in a declaration on behalf of the 27-nation bloc.