Libyan government forces pounded rebels with heavy artillery west of Ajdabiya on Sunday, forcing hundreds of residents and some rebel fighters to flee the key crossroads town.
The intense shelling came a day after at least eight people were killed and 27 wounded as the forces loyal to Libyan strongman Muammar Gaddafi fired rockets at rebel positions, hospital officials said.
"Gaddafi's forces approached the city, they bombed the western gate. The sound of the guns are coming closer, that's why many are leaving," said Omar Salim Mufta, a 27-year-old resident rebel supporter who has not taken up arms.
Another civilian, 48-year-old Milud Ghait, appealed for NATO forces to carry out air strikes on the area as about a dozen pickup trucks carrying rebel fighters left the eastern town.
"Gaddafi's forces are on the western outskirts of Ajdabiya, but NATO is doing nothing. Where is NATO? What are the French, British and Americans doing?" he asked.
It was not immediately clear if there were casualties from Sunday's shelling whose range is about 20 kilometres (12.5 miles), suggesting pro-Gaddafi forces were within that distance of Ajdabiya.
"They are about 20 kilometres away. They are firing at us with Grad rockets," said Kemal Abdel Mohammed Abdel, 24, a rebel returning from the front line.
The ragtag rebel fighters had previously appeard set to move on Brega, 80 kilometres (50 miles) west of Ajdabiya, with some correspondents reporting they were on the outskirts of the strategic oil town.
In the besieged western bastion of Misrata, meanwhile, rebels said they mounted successful raids on Gaddafi's troops in the city.
Smoke billowed over the centre of Misrata, which a witness said was from a destroyed regime tank, as the rebels claimed to have taken out several pro-Gaddafi snipers along the port city's main avenue, Tripoli Street.
On the diplomatic front, the New York Times reported US President Barack Obama's administration has launched an intense search for a country, likely in Africa, that could provide refuge to Gaddafi.
But amid looming indictments against Gaddafi by the International Criminal Court in the Hague for the atrocities committed against his own people during the ongoing conflict and for the 1988 bombing of Pan Am 103, US officials only have a narrow list of potential host countries.
On Saturday, France said a new UN resolution to push Gaddafi into quitting was unnecessary, and Germany suggested frozen Libyan funds be diverted to the United Nations to pay for aid to victims of the conflict.
US-based Human Rights Watch (HRW) had said its researchers reported the use of internationally banned cluster munitions against Misrata.