Muammar Gaddafi's forces attacked rebel fighters with a hail of machine gun and rocket fire on Tuesday, prompting a panicked, chaotic retreat to Bin Jawad, a witness said.
Rebel fighters waiting on the open desert road leaped behind dunes and mounds of earth and shot at the Gaddafi troops as they arrived.
As the onslaught grew, the rebels ran to their pick-up trucks and sped off down the road to Bin Jawad, about 150 km east of Gaddafi's home town of Sirte.
Bullets zipped overhead and shells landed on and near the road as they retreated, said a Reuters correspondent following the convoy.
Gaddafi forces appeared to end their attack several kilometres west of Bin Jawad and the rebels stopped in the town to wait and regroup.
The rebel fighters had raced along the coastline retaking several oil towns after Western warplanes began air strikes on Gaddafi positions in the east and west of the desert country on March 19.
But their charge westwards met resistance as they neared Sirte. Gaddafi forces used rockets, rocket propelled grenades and medium-calibre weapons to push them back to the small town of Nawfaliyah.