Heavy shelling by forces loyal to Libyan leader Moamer Gaddafi killed at least four civilians in the besieged third city of Misrata, the scene of bloody clashes for more than 40 days.
NATO's role in the conflict came under renewed scrutiny and on the diplomatic front both the European Union and the African Union announced initiatives to help bring about a ceasefire.
The EU also announced it would rush aid to Misrata, helping to evacuate the wounded and provide food, water and medical supplies.
A source in the insurgent stronghold of Benghazi said four people, including two children, had been killed in Misrata and 10 wounded on Friday.
"Gaddafi forces continue to fire blindly on the houses of Misrata," the rebel source said. "Today, four martyrs fell, including two children under age four."
Misrata, about 215 kilometres (130 miles) east of Tripoli and the rebels' last major bastion in the west of Libya, has seen fighting for more than 40 days since the start of the uprising against Gaddafi on February 17.
The clashes came as a debate raged over how well NATO air forces are enforcing a UN-mandated no-fly zone.
Pressing the United Nations to allow a humanitarian mission, EU foreign policy chief Catherine Ashton sent a letter to UN Secretary General Ban Ki-moon saying the 27-nation bloc was ready to come to the aid of Misrata.
"Everyone knows that we must do something and in the coming days we will have a large mobilisation of the international community," a high-ranking European diplomat said earlier, speaking on condition of anonymity.
Criticism of the role of NATO air forces, who are charged by the UN Security Council with protecting the civilian population, was growing with one rebel source in Benghazi saying that "civilians are being killed in Misrata" and urging "France to take command of the operations."
Earlier, rebels in Misrata criticised NATO for what they said was its lack of response to a relentless pounding by Gaddafi forces for more than a month.
NATO was already facing criticism by the opposition after its warplanes hit rebel tanks on Thursday near the oil town of Brega, killing four people, wounding 14 and leaving six others missing.
NATO chief Anders Fogh Rasmussen on Friday called the bombing an "unfortunate incident."
"I strongly regret the loss of life," Rasmussen said of the strike, labelled by rebel military commander General Abdelfatah Yunis as a NATO "error."
The operation's deputy commander, British Rear Admiral Russell Harding, refused to apologise, saying the alliance was unaware rebels were using tanks and that it was becoming hard to distinguish between the two sides on the road.
The rebels said they were "not seeking an apology but an explanation."
"We are not questioning the intention of the NATO," rebel spokesman Shamsiddin Abdulmolah told AFP.
"It appears that there has been a breakdown of communication, perhaps due to the visibility on the ground... and that the positions of our tanks have not make clear to the NATO," he said, speaking in English.
Yunis insisted on Thursday night that the rebels had told NATO they were moving T-55 and T-72 heavy tanks from Benghazi to Brega.
A source close to key Western envoys in Benghazi who are in regular contact with the opposition Transitional National Council said "the problem is there are no official direct links" between the rebel military leadership and NATO.
In Benghazi, around 400 protesters chanted "Down with NATO" in reaction to the Brega bombing.
Meanwhile, a UN human rights team set up to investigate alleged violations in Libya will leave on Sunday from Geneva on a field mission, the head of the team, Cherif Bassiouni said.
The 47-member UN Human Rights Council had unanimously decided to set up the investigation into suspected crimes against humanity after Libya's army and air force fired on civilians.
European Union foreign ministers will meet a member of the Transitional National Council next week, despite a lack of consensus in the bloc on how to deal with the opposition group.
EU foreign policy chief Catherine Ashton issued the invitation on Tuesday to the meeting in Luxembourg, which will be the first between the Liyan opposition and the EU as a whole.
The TNC will be represented by Mahmoud Jibril, the group's foreign affairs official.
A group of African leaders will visit Libya this weekend and meet with both sides in the country's deepening conflict to demand an immediate ceasefire.
South African President Jacob Zuma and other leaders from a high-level African Union panel will first hold talks in Mauritania on Saturday, then travel to Libya to meet Gaddafi in Tripoli and rebel leaders in Benghazi.