Libyan rebels said yesterday they are ready for the final battle of their more than six-month uprising after their leaders gave Muammar Gaddafi’s last loyalists a Saturday deadline to surrender.

The head of the rebel National Transitional Council (NTC), Mustafa Abdel Jalil, said the respite was offered to mark the three-day Eid al-Fitr feast which follows the end of the Muslim fasting month of Ramadan.

But Nato vowed no let-up in its bombing of Col Gaddafi’s forces until they stop attacking civilians, warning that the elusive Libyan leader was still in active command of some troops.

Rebel military spokesman Colonel Ahmed Omar Bani said he still hoped that efforts to negotiate the peaceful surrender of the remaining towns in loyalist hands would bear fruit.

But he added that there was no sign of that yet and that time was running out.

“Zero hour is quickly approaching. We would like everyone to know that we are ready for a final military battle,” he told a news conference in the rebels’ eastern stronghold of Benghazi.

“So far we have been given no indication of a peaceful surrender. We want everyone to know that we are prepared militarily for the battle that will end the conflict,” he said.

“We continue to seek a peaceful solution, but on Saturday we will use different methods against these criminals.”

The NTC chief said that talks were under way with civic and tribal leaders in a number of towns, including Col Gaddafi’s birthplace Sirte in an effort to avoid bloodshed but said they must rapidly come to a conclusion.

“From Saturday, if no peaceful solution is in sight on the ground, we will resort to military force,” Abdel Jalil said. He warned that Col Gaddafi “is not finished yet”, as Nato said the strongman was still able to command and control his remaining troops even though he is on the run.

“He is displaying a capability to exercise some level of command and control,” Colonel Roland Lavoie, military spokesman of the Nato air mission in Libya, told a news briefing via video link from his headquarters in Naples.

“The pro-Gaddafi troops that we see are not in total disarray, they are retreating in an orderly fashion, conceding ground and going to the second best position that they could hold to continue their warfare,” he added.

While rebels sought to talk Gaddafi troops into surrendering in their last major stronghold of Sirte, Lavoie said Nato air strikes were continuing and were now focused near the town.

Italian news agency Ansa, citing “authoritative Libyan diplomatic sources”, reported on Monday that Col Gaddafi and his two sons – Saadi and Seif al-Islam – were holed up in Bani Walid, a town southeast of Tripoli.

The rebel military spokesman said that Col Gaddafi’s once feared intelligence chief, Abdullah al-Senussi, who is wanted by the International Criminal Court, may have been killed as he tried to reach Bani Walid. Neighbouring Algeria, mean­while, defended its decision to give shelter to Gaddafi’s wife and three more of his children, after the rebels angrily demanded that they be returned to stand trial. Algerian Foreign Ministry spokesman Amar Belani said the decision to allow Col Gaddafi’s wife Safiya, daughter Aisha and sons Mohammed and Hannibal to cross into the country on Monday was based solely on humanitarian concerns.

“These people have been admitted to Algeria for strictly humanitarian reasons,” Mr Belani said, adding that UN chief Ban Ki-moon, the Security Council and number two leader of the rebels’ NTC, Mahmud Jibril, had been informed.

Just hours after crossing over, daughter Aisha gave birth to a girl, Algerian authorities announced yesterday. “Aisha gave birth very early this morning. She had a little girl. Mother and daughter are doing fine,” said a government official, speaking on condition of anonymity.

Later yesterday, Algeria said it decided to grant safe haven to the wife and three children of the ousted Libyan leader for “strictly humanitarian reasons”.

Meanwhile, Zimbabwe expelled Libya's ambassador to Harare after he recognised the rebel National Transitional Council (NTC) fighting Col Gaddafi's regime.

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