Muammar Gaddafi's forces were accused of a "massacre" during a heavy assault on a key town, as rebels pushed towards Tripoli and the opposition declared itself Libya's sole representative.

As battles raged east and west of the capital and casualties rose on both sides, the national council -- the opposition's embryonic government -- met to make the proclamation at its first formal gathering.

"The council declares it is the sole representative all over Libya," former justice minister Mustafa Abdel Jalil said after the meeting in Benghazi, the rebel stronghold in the east of the strife-torn North African country.

Former justice minister Mustafa Abdel Jalil, one of the first high-profile Libyans to defect from Gaddafi's four-decade regime when the uprising began, has been appointed chairman of the 30-member body.

Rebels say they have set up local councils in cities they hold across the east and intend their transitional government to lead the country into an election.

Shortly after, a doctor in the town of Zawiyah accused fighters loyal to Gaddafi of committing a "massacre" in the town, a strategic centre for anti-regime protests just west of Tripoli.

"This was a real massacre. The situation is catastrophic. They killed many people. They killed my daughter," the doctor, who was speaking on condition of anonymity, told AFP on the telephone from Zawiyah.

The rag-tag rebel force said later that they downed a pro-Gaddafi jet near Ras Lanuf in the country's east, killing two pilots, according to a video seen by an AFP correspondent.

A rebel officer who defected when the uprising began last month said earlier "we pushed them past Bin Jawad and today we will pound them back to Sirte,"Gaddafi 's hometown, about 150 kilometres to the west.

An AFP reporter saw groups of rebels in the small settlement of Bin Jawad.

Asked when the rebels would advance further towards Sirte, a retired soldier turned rebel said it would depend on reinforcements and the weather. A dust storm had drastically reduced visibility in Ras Lanuf.

Among rebels, there were reports of negotiations for a peaceful entry into Sirte, although that would seem unlikely given its symbolism for KadhaGaddafi.

Namil Mashash, a rebel leader in Ras Lanuf, told AFP "we can easily enter Sirte, but we want to avoid the loss of life. That is why we are negotiating to go to Sirte without fighting and then continue on to Tripoli."

Defected soldier Ibrahim al-Atrashi said that, "in the past three days, 7,000 men have moved from Benghazi west towards the front."

After heavy clashes yesterday, the rebels controlled Ras Lanuf, a pipeline hub on the Mediterranean coast that houses a major refinery and petrochemical complex.

Hospitals in rebel-held towns to the east said they had received up to 10 dead and more than 20 wounded from yesterday's fighting for the town.

Atrashi said 16 rebels died. He also said 25 loyalists were killed, but that was impossible to confirm independently.

Meanwhile, the death toll from mysterious twin explosions at an arms dump in the rebel-held eastern city of Benghazi on yesterday night rose to between 32 and 34, a doctor said.

Libyan planes were circling overhead in Bin Jawad and Ras Lanuf, about 40 kilometres east.

One rebel said: "I want to give a message to America. See these planes? We want a no-fly zone," something Western powers have so far been unwilling to impose.

At funerals for those killed in Ras Lanuf, another man said "there will be rivers of blood... How long will the West hold back and do nothing? People are asking why the West is watching without doing anything."

French Foreign Minister Alain Juppe said today his country was seeking a UN Security Council resolution to impose a no-fly zone.

"We are working in New York with the British to get a UN Security Council resolution creating an air exclusion zone to avoid bombings," he said.

In Libya's west, loyalists rained tank shells and machine gun fire on Zawiyah, 60 kilometreswest of Tripoli, as they sought to retake the city from rebels, Sky News reported.

Later, there were reports tanks manned by Gaddafi's forces had fired on houses when they launched a fresh assault on the strategic protest centre.

"At least seven people were killed in the offensive launched this morning by two battalions on the city, and there are dozens of wounded," a doctor in Zawiyah told AFP.

"What happened this morning is horrible. The mercenaries opened fire on anyone who dared go outdoors, even on children," said the doctor, appealing for help.

The doctor and a resident stressed that, despite the heavy assault, rebels were still in control of the centre of Zawiyah. Another resident said loyalists had been pushed out of the town.

Reporting from Zawiyah, Sky News correspondent Alex Crawford reported that pro-Gaddafi forces shot at civilians as they rolled into the town on their tanks.

"We witnessed a fresh column of tanks coming into the town, at least five. They were loaded up with soldiers," said Crawford.

"That's just what I witnessed, but I am told that in other areas of the city there were many more tanks as well.

"As they went by, the soldiers were shooting at people sitting and standing outside their homes, including a family which has a 10-year old boy," she said.

Crawford said the town's hospitals had received at least eight dead and that she had also seen the bodies of up to a dozen loyalists in the market square which has been the focal point of the anti-regime protests.

Crawford said some defectors had brought their weapons with them, including anti-tank weapons, anti-aircraft weapons and even a few tanks.

"How they managed to fight them back is absolutely a minor miracle," she said, adding loyalists remained on the town's outskirts.

With the protests spreading across the Arab world, threatening US allies like Bahrain and Oman, the Wall Street Journal reported Washington was moving towards a strategy of keeping in power regimes willing to reform.

Citing unnamed officials and diplomats, the newspaper said the administration was leaning toward this approach even if that means the full democratic demands of Arab citizens might have to wait.

"What we have said throughout this is that there is a need for political, economic and social reform, but the particular approach will be country by country," the paper quoted a senior administration official as saying.

In other developments across the Arab world, the Saudi interior ministry said protests were banned as they ran counter to Islamic sharia law and Saudi traditions, while Omani Sultan Qaboos sacked two ministers.