By Mohammed Abbas
TOBRUK, Libya (Reuters) - The Libyan army told people in Benghazi to lay down their arms on Wednesday as its troops advanced closer to the rebel stronghold for what could be the decisive battle in the uprising against Muammar Gaddafi.
The town of Ajbadiyah, 150 km (90 miles) south of Benghazi on the Gulf of Sirte, was firmly in government hands after most of its rebel defenders retreated under fire from a withering artillery barrage on Tuesday. Those who stayed had now handed over their guns, a rebel officer said.
In Benghazi, seat of the insurgents' provisional national council, the mood was a mixture of defiance and nervousness, with some citizens predicting a bloodbath and others confident the rebels would still snatch victory against the government offensive.
Forces loyal to Gaddafi have retaken a string of coastal towns in the past 11 days, reversing gains made by the rebel army early in the uprising against his 41-year-rule of the North African country. Important oil industry facilities are now mostly back under government control.
An armed forces statement read on state television described the offensive as a humanitarian operation to save the people of "beloved Benhgazi" and said troops would not take revenge on them if they surrendered.
"Advise your duped sons to hand over their weapons to the armed forces or the People's Leadership and they will be covered by an amnesty requested by the Commander (Gaddafi), which will be valid for any person who hands over his weapon to the armed forces and refrains from resistance and subversion," it said.
Benghazi residents said they had found leaflets scattered in the streets also telling them they would not be punished if they gave up the fight. Repeating assertions by Gaddafi, the leaflets said the rebels were linked to al Qaeda militants or high on drugs.
A former government official who lives in Benghazi, Salah Ben-Saud, said that life in the port city was normal.
"The streets are busy and the shops are full. There have been some demonstrations in favour of the revolution ... and pro-Gaddafi people have not really shown their face."
"There were rumours that he (Gaddafi) would try to take back Benghazi and that made people a bit nervous, but he didn't and people here don't think he would succeed anyway if he tried."
DESERT OPTIONS
However, he was under the impression that rebels had retaken Ajdabiyah, although sources there said that was not so.
Adel Yahya, former rebel fighter, speaking by telephone from Ajdabiyah, said the army was in control.
"I went out and told them I had a rifle and gave to them. We gave our guns to them, and they said you should come out and celebrate for Gaddafi. We lost, we lost," he said, breaking into tears.
The capture of the junction town of Ajdabiyah gives Gaddafi's army several options in a desert region where British forces led by Field Marshall Bernard Montgomery battled German soldiers commanded by General Erwin Rommel in World War 2.
They could head north up the coastal highway to Benghazi, or strike east to Tobruk 400 km (250 km) to isolate the rebel capital.
Elite army units forces led by two of Gaddafi's sons were reported to be moving up to the front on Tuesday. The rebel army, made up largely of young volunteers with little training and defectors from the government military, have been overwhelmed by the artillery, tanks and warplanes of Gaddafi's troops.