Libyan rebels await counter-attack by Gaddafi forces

ZAWIYAH, Libya (Reuters) - Armed rebels who have seized control of Zawiyah, close to the capital Tripoli, were preparing for a counter-attack as Libyan leader Muammar Gaddafi vowed to cling on to his 41-year-old rule.

The rebels said on Sunday about 2,000 troops loyal to Gaddafi had surrounded the city.

"If we are fighting for freedom, we are ready to die for it," said a former police major who switched sides and joined the rebellion which started about 10 days ago.

Speaking anonymously, he said more than 2,000 police had defected and were ready to defend Zawiyah. There were also army defectors, he said. The rebels have several army tanks, some supplied by the army defectors, and anti-aircraft guns.

Bullet holes pock-marked charred buildings in Zawiyah, while burnt-out vehicles lay abandoned. Outside the last rebel checkpoint, pro-Gaddafi troops were deployed in full force, equipped with tanks and anti-aircraft guns on pickup trucks.

The scene was only 50 km west of Tripoli. Residents even in parts of the capital were manning barricades, proclaiming defiance after security forces melted away.

A general in the east, where Gaddafi's power has evaporated, told Reuters his forces were ready to help rebels in the west.

"Our brothers in Tripoli say: "We are fine so far, we do not need help'. If they ask for help we are ready to move," said General Ahmed el-Gatrani, one of most senior figures in the mutinous army in Benghazi.

Analysts say they expect rebels to eventually take the capital and kill or capture Gaddafi, but add that he has the firepower to foment chaos or civil war.

Serbian television quoted Gaddafi as blaming foreigners and al Qaeda for the unrest and condemning the U.N. Security Council for imposing sanctions and ordering a war crimes inquiry.

"The people of Libya support me. Small groups of rebels are surrounded and will be dealt with," he said.

European powers said it was time for Gaddafi to stand down and Secretary of State Hillary Clinton said the United States was getting in touch with opposition groups.

"We are reaching out to many different Libyans in the east, as the revolution moves westward there as well ... it is too soon to see how this is going to play out," she said before leaving for Geneva to consult with allies.

The Security Council unanimously imposed travel and asset sanctions on Gaddafi and close aides on Saturday. It adopted an arms embargo and urged that his crackdown on protesters be referred to the International Criminal Court.

The unrest has helped drive oil above $112 a barrel. Although Libya only produces 2 percent of the world's oil and Saudi Arabia has boosted production, traders fear turmoil intensifying across the Arab world.

Gaddafi's son Saif al-Islam said there was a "big gap between reality and media reports." "The whole south is calm. The west is calm. The middle is calm. Even part of the east."

As if to reinforce that point, authorities took a group of foreign journalists to Zawiyah, apparently to show they still held the town. But it was evident that rebels were in control.

Residents told of fierce fighting against pro-Gaddafi paramilitaries armed with heavy weapons.

"Gaddafi is crazy. His people shot at us using rocket-propelled grenades," said a man who gave his name as Mustafa. Another man called Chawki said: "We need justice. People are being killed. Gaddafi's people shot my nephew."

"ENEMY OF GOD"

Locals in Tajoura, a poor neighbourhood of Tripoli, had erected barricades of rocks and palm trees across the streets.

Residents said troops fired on demonstrators who tried to march from Tajoura to central Green Square overnight, killing at least five. The number could not be independently confirmed.

"Gaddafi is the enemy of God!" a crowd chanted on Saturday at the funeral of a man they said was shot by Gaddafi loyalists.

Libyan state television again showed a crowd chanting their loyalty to Gaddafi in Green Square on Saturday. But journalists there estimated their number at scarcely 200.

There were queues outside banks in Tripoli for the 500 Libyan dinars ($400) the government had promised it would start distributing on Sunday to each family.

Many did not get the cash. "They just took a photocopy of our ID and registered people on a list," said one man.

From Misrata, a city 200 km (120 miles) east of Tripoli, residents said by phone a thrust by forces loyal to Gaddafi, operating from the airport, had been rebuffed with bloodshed.

But Libyan exile groups said later aircraft were firing on the city's radio station.

In the eastern city Benghazi, opponents of the 68-year-old leader said they had formed a National Libyan Council to be the "face" of the revolution, but it was unclear who they represented. They said they wanted no foreign intervention and had not made contact with foreign governments.

U.N. SANCTIONS

Western leaders, emboldened by evacuations that have brought home many of their citizens from the vast desert state, spoke out more clearly than before against Gaddafi.

"We have reached, I believe, a point of no return," Italy's Foreign Minister Franco Frattini said, adding it was "inevitable" for Gaddafi to leave power.

Britain revoked his diplomatic immunity and said it was freezing his family's assets. "It is time for Colonel Gaddafi to go," Foreign Secretary William Hague said.

Three British military planes evacuated 150 civilians from Libya's desert on Sunday, after a similar operation on Saturday.

Wealthy states have sent planes and ships to bring home expatriate workers but many more, from poorer countries, are stranded. Thousands of Egyptians streamed into Tunisia on Sunday, complaining Cairo had done nothing to help them.

Malta said it had refused a Libyan request to return two warplanes brought to the island by defecting pilots last Monday.

(Additional reporting by Yvonne Bell and Chris Helgren in Tripoli, Marie-Louise Gumuchian and Souhail Karam in Rabat, Dina Zayed and Caroline Drees in Cairo, Tom Pfeiffer, Alexander Dziadosz and Mohammed Abbas in Benghazi, Arshad Mohammed in Washington and Louis Charbonneau at the United Nations; writing by Andrew Roche; editing by Jon Boyle)