An oil depot has been hit in the rebel-held port of Ras Lanuf in Eastern Libya as Gaddafi forces continue their effort to retake the town.

Eyewitnesses said the facility had been bombed by aircraft and hit in three places.

There was a big explosion and a huge flame leapt hundreds of metres into the sky, an AFP reporter said.

This was the first time that an oil facility appeared to have been targetted.

Ras Lanuf has been the 'front line' of intense fighting between pro and anti-Gaddafi forces since late last week, with neither side appearing to make any significant headway.

Meanwhile, AFP reported that scores of Libyan rebels, packed into dozens of vehicles, have retreated into Ras Lanuf after artillery and air strikes from government troops.

They streamed back after several hours of sustained shelling and at least three air strikes around five kilometres (three miles) west of the rebel-held town on Libya's northern Mediterranean coast.

The rebels had captured the town on Friday and pushed west to the hamlet of Bin Jawad some 30 kilometres (19 miles) away before being forced to retreat to a point between the two settlements on Sunday.