Rebels defending the key Libyan town of Ajdabiya came under new attack from the forces of strongman Muammar Gaddafi today with little prospect of foreign air protection any time soon.
An airstrike killed one fighter and wounded another, witnesses and medics said after explosions and anti-aircraft fire rocked the western edge of Ajdabiya.
Residents said insurgents still partly controlled the oil centre of Brega, 80 kilometres to the west, but that the last rebel checkpoint west of Ajdabiya was just six kilometres away.
Elsewhere tension mounted in Bahrain following the entry of troops from other Gulf states to help the Sunni-minority regime deal with mass demonstrations for reform led by the strategic kingdom's Shiite majority.
One month after Libya's revolt began, countries in the powerful Group of Eight and at the United Nations Security Council remained split over imposing a no-fly zone to stop government air strikes.
But US Secretary of State Hillary Clinton held out the possibility of economic and political aid to the opposition at a meeting with a rebel leader in Paris, US officials said.
The lightly armed rebels have been pushed back some 200 kilometres by Gaddafi's better equipped forces in the past week.
They are now only 170 kilometres from their capital of Benghazi, Libya's second city.
Ajdabiya guards vital roads north to Benghazi and east to the oil port of Tobruk, giving the insurgents control of eastern Libya.
The rebels "have no hope, it's now a lost cause for them," Gaddafi said in an interview with Italian daily Il Giornale published today.
They have "two choices: surrender or flee," he said, adding: "If they surrender we will not kill them."
Gaddafi ruled out any mediation, repeating claims the rebels were "terrorists linked to Osama Bin Laden" and accusing them of using civilians as human shields.
French Foreign Minister Alain Juppe said the G8 was still divided over military intervention being pushed for by France and Britain.
"For the moment I have not convinced them," Juppe told Europe 1 radio, referring to talks with his counterparts from Britain, Canada, Germany, Italy, Japan, Russia and the United States which began last night.
"Gaddafi is scoring points," Juppe said, adding that there was nothing to stop him seizing Benghazi.
"Currently we do not have the military means because the international community has not decided to provide them," he said.
A senior US official said in Paris late yesterday there was a "sense of urgency" about Libya at a dinner attended by the foreign ministers.
But the consensus was to take the issue to the Security Council "for a full and public discussion of what all of the measures that have been discussed entail," the official said.
Some ministers had alluded to no-fly zones, some mentioned "safety zones," while others talked of further sanctions, he added.
The goal they all backed was to "increase pressure" on Gaddafi and "stop the regime from using force" against the Libyan people, the official said.
At the Security Council yesterday European and Arab envoys stressed the need for urgent UN action, but diplomats said it could be several days before any measures are agreed.
Britain and France have been boosted by Arab League support for a no-fly zone but China is opposed, as is India, while the United States, Germany and particularly Russia have doubts.
Moscow's UN envoy Vitaly Churkin said crucial questions had not been answered, while stressing that Russia was "open-minded" about proposals to end the violence.
"If there is a no-fly zone, who is going to implement the no-fly zone? How is the no-fly zone going to be implemented?" he asked.
"We have not had enough information. To say 'we need to act quickly,' 'as fast as possible' but not to provide the fundamental answers to those fundamental questions, to us is not really helping."
US officials said Clinton went beyond offering humanitarian aid but stopped short of promising military help in the highest-level talks yet between Washington and the opposition.
Aid could be political or economic or even include "certain forms of equipment," one senior official said.
The chief US diplomat "had a private and candid conversation" with Mahmoud Jibril, who handles foreign affairs for Libya's transitional national council based in Benghazi, top Clinton aide Philippe Reines told reporters.
Jibril had asked the United States for combat material, the other senior official said, adding that Clinton replied she would consider it but made no commitments.
The US government has appointed a representative to the rebel council in line with a pledge by President Barack Obama, officials said. "The intention is for him to go to Benghazi," one added, declining to identify him.
The European Union has also sent a fact-finding mission to Benghazi to look at all options, including an air exclusion zone, a spokeswoman said yesterday.
In Tripoli UN envoy Abdul Ilah Khatib urged an end to the violence in Libya and access for humanitarian relief efforts, in talks with Foreign Minister Mussa Kussa.
Khatib "called for cooperation from the authorities on human rights and humanitarian concerns," UN deputy spokesman Farhan Haq said from New York.
Senior Libyan officials had assured him "the government would fully cooperate" with an inquiry commission set up by the UN Human Rights Council.
Meanwhile the International Energy Agency said Libyan oil production had almost halted, depriving the market of some 1.3 million barrels per day for a considerable time because of damage to installations from the fighting.
In Bahrain the intervention of Saudi-led forces caused alarm today, with Shiite theocracy Iran calling it "unacceptable" and likely to complicate the already volatile situation there.
A spokesman for UN chief Ban Ki-moon said he was "troubled" by the violence in Bahrain and noted the foreign intervention "with concern."
The United States, whose Fifth Fleet is based in Bahrain, has urged restraint on all sides but has not called for the foreign forces to withdraw.