Loyalist forces shelled the edge of the Libyan town of Ajdabiya yesterday forcing insurgents there to retreat, as Nato expressed regret at the deaths caused by an alliance air strike on rebel tanks.

Later in the day, forces loyal to Libyan strongman Muammar Gaddafi were engaged in heavy fighting with rebels in the insurgent-controlled town of Misurata, an AFP correspondent witnessed.

Rebel sources in the town said four people, including two children, had been killed by Col. Gaddafi’s troops.

Reacting to earlier in the day shelling, panicked rebels retreated to the city centre, seven kilometres away.

The assault came a day after many insurgents and civilians stampeded out of the eastern city on rumours that Muammar Gaddafi’s troops were at its gates.

An AFP reporter said rebels had yesterday morning regrouped at Ajdabiya, 860 kilometres east of Tripoli, before advancing westwards to the front line near the oil town of Brega.

On Thursday, families packed into cars and trucks had joined rebel military vehicles in a charge northeast towards the insurgent stronghold Benghazi with rebels saying Grad missiles had hit the edge of the town. The flight on Thursday from Ajdabiya came after two air strikes by Nato warplanes destroyed three rebel tanks and killed four people near Brega. Six people were missing.

Nato chief Anders Fogh Rassmussen yesterday described the bombing as an “unfortunate incident.”

“I strongly regret the loss of life,” Mr Rasmussen said, one day after a strike. The secretary-general made the statement on Nato’s television channel a few hours after the alliance’s operation’s deputy commander, British Rear Admiral Russell Harding, refused to apologise for the air strike. Admiral Harding said the alliance was unaware that rebels were using tanks in their campaign against Col. Gaddafi’s forces, and said it was becoming hard to distinguish between the two sides on the road between Brega and Ajdabiya.

“The situation on the ground is very fluid,” Mr Rasmussen said. “We have seen in the past that tanks have been used by the Gaddafi regime to attack civilians.”

But the rebels said they were “not seeking an apology but an explanation” from Nato.

“We are not questioning the intention of the Nato,” rebel spokesman Shamsiddin Abdulmolah said.

“It appears that there has been a breakdown of communication, perhaps due to the visibility on the ground... and that the positions of our tanks were not made clear to the Nato,” he said.

General Abdelfatah Yunis, the insurgents’ commander, said the rebels had informed Nato that they were moving T55 and T72 heavy tanks from their eastern stronghold Benghazi to Brega. It is the second time in less than a week that Nato warplanes accidentally struck rebel positions near Brega.

The alliance has concluded that last week’s bombing was an “unfortunate accident” and the rebels themselves admitted its fighters had made a “mistake” by firing tracers in the air, prompting warplanes to act in self-defence.

Meanwhile, a UN human rights team set up to investigate violations in Libya will leave tomorrow from Geneva to undertake a field mission.