By Angus MacSwan
NAWFALIYAH, Libya (Reuters) - Rebels advanced towards the birthplace of Libyan leader Muammar Gaddafi on Monday, firing mortars and heavy machineguns in sporadic clashes with loyalist forces.
Emboldened by Western-led air strikes against Gaddafi's forces, the rebels took the town of Nawfaliyah and moved towards Sirte, the leader's birthplace and an important military base, in the sixth week of an uprising against his 41-year rule.
Diplomatic activity accelerated on the eve of a 35-nation meeting in London on Tuesday to discuss the crisis in the oil-producing North African country.
Italy proposed a political deal including a quick ceasefire, exile for Gaddafi and dialogue between rebels and tribal leaders.
Russia criticised the Western intervention that has turned the tide in the conflict, saying it amounted to taking sides in a civil war and breached the terms of a United Nations Security Council resolution.
The French and British leaders called for supporters of Gaddafi to abandon him and asked Libyans opposing him to join a political process to pave the way for his departure.
"Gaddafi must go immediately," President Nicolas Sarkozy and Prime Minister David Cameron said in a joint statement. "We call on all his supporters to drop him before it is too late."
In the nine days since the start of the Western-led bombing, the motley volunteer force of rebels has pressed half-way along the coast from its stronghold of Benghazi towards the capital Tripoli, regaining control of all major oil terminals in the east of the OPEC member state.
A U.S. Treasury Department official said the rebels cold sell Libyan crude oil without being subject to U.S. sanctions if they conducted transactions outside the National Oil Corp and other sanctioned entities in Gaddafi's administration.
On Monday the rebels met sporadic resistance as they continued their advance in convoys of pick-up trucks with machineguns mounted on them.
Just west of sandy, barren Nawfaliyah, bursts of sustained machinegun fire and the whoosh of several rockets could be heard, and plumes of black smoke rose ahead.
"Our guns are trying to get the Gaddafi people," said Faisal Bozgaia, 28, a hospital worker turned rebel fighter. "Those are from our guns," he told Reuters, pointing to the smoke columns.
Rebels said occasional ambushes by Gaddafi forces had pushed them back but that they later regained their positions.
"We were fighting here with Gaddafi forces. We are advancing one, two kilometres at a time," rebel Khalif Ali, 22, said in the town of Harawah, west of Nawfaliyah.
But the rapid advance is stretching rebel supply lines.
"We have a serious problem with petrol," said a volunteer fighter waiting to fill his vehicle in the oil town of Ras Lanuf.
Western-led air strikes began on March 19, two days after the U.N. Security Council authorised "all necessary measures" to protect civilians from Gaddafi's forces. But since the outset, the mission has faced questions about its scope and aims, including the extent to which it will actively back the rebel side and whether it might target Gaddafi himself.
Russia, which abstained in the U.N. vote, said Western attacks on Gaddafi's forces amounted to taking sides with the rebels.
"We consider that intervention by the coalition in what is essentially an internal civil war is not sanctioned by the U.N. Security Council resolution," Foreign Minister Sergei Lavrov told a news conference.
Russian oil company Tatneft is expected to book $100 million of losses on capital expenditure in Libya as a result of the conflict, a company source told Reuters.
NATO chief Anders Fogh Rasmussen told the BBC: "We are there to protect civilians -- no more, no less." France, which dropped the first bombs of the campaign nine days ago, said the coalition was strictly complying with U.N. terms.
Qatar became the first Arab country to recognise the rebels as the sole legitimate representative of the Libyan people. Libyan state television called the move "blatant interference."
Contradicting a rebel claim to have captured Sirte, Reuters correspondent Michael Georgy reported from the city that the situation was normal. He had seen some police and military, but no signs of any fighting.
Soldiers were manning checkpoints and green Libyan flags flapped in the wind. Militiamen fired AK-47 rifles defiantly into the air. "If they come to Sirte, we will defend our city," said Osama bin Nafaa, 32, a policeman.
As the rebels pressed forward in the east, they reported attacks by Gaddafi's forces in the west.
Gaddafi loyalists now control part of Misrata, the country's third largest city, a rebel spokesman said. The government in Tripoli said it had "liberated" Misrata from rebels, and declared a cease-fire there.
A rebel spokesman in another western town, Zintan, said forces loyal to Gaddafi bombarded the town with rockets early on Monday, Al Jazeera reported.
The Defence Ministry in London said British Tornado aircraft destroyed Libyan government ammunition bunkers in the Sabha area of Libya's southern desert in the early hours of Monday.
Libya's state news agency Jana said the raids caused several casualties.
CHANGE OF COMMAND
On Sunday, NATO agreed to take full command of military operations in Libya after a week of heated negotiations. The United States, which led the initial phase, had sought to scale back its role in another Muslim country after the wars in Iraq and Afghanistan.
An alliance spokeswoman said on Monday the transition would take a couple of days.
U.S. Defence Secretary Robert Gates said Western air strikes had "eliminated" Gaddafi's ability to move his heavy weapons. He also raised the possibility that Gaddafi's government could splinter and said the international conference in London on Tuesday would discuss political strategies to help bring an end to his rule.
Italian Foreign Minister Franco Frattini told reporters he had discussed Rome's proposals for a political deal on Libya with Germany, France and Sweden and expected to do so with Turkey later on Monday.
He said an African country could offer Gaddafi asylum, and ruled out that the Libyan leader would remain in power.
"Gaddafi must understand that it would be an act of courage to say: 'I understand that I have to go'," Frattini added. "We hope that the African Union can find a valid proposal."
Libya accused NATO of "terrorising" and killing its people as part of a global plot to humiliate and weaken it.
The government says the Western-led air attacks have killed more than 100 civilians, a charge denied by the coalition which says it is protecting civilians from Gaddafi's forces and targeting only military sites to enforce a no-fly zone.
(Additional reporting by Alexander Dziadosz, Edmund Blair, Maria Golovnina, Michael Georgy, Ibon Villelabeitia, Tom Pfeiffer, Lamine Chikhi, Mariam Karouny, Joseph Nasr, Marie-Louise Gumuchian and Steve Gutterman; Writing by Mark Trevelyan; Editing by Giles Elgood)
