Forces of Libya's interim ruling council are poised for an assault on Bani Walid after failing to persuade Muammar Gadafy loyalists to abandon one of their last remaining bastions.
Elsewhere, British prime minister David Cameron said a senior diplomat was moving to Tripoli today to re-establish the country's full diplomatic presence in the Libyan capital.
Britain closed its embassy in Tripoli in February and evacuated embassy staff as a revolt against the rule of Muammar Gadafy gathered force. It soon sent diplomats to the rebel-held city of Benghazi.
Military units under Libya's interim council are trying to push Gadafy forces from the desert town of Bani Walid, 150km southeast of Tripoli, as well as the coastal city of Sirte and a swathe of territory stretching far into the desert interior.
"The door is still open for negotiations. Our offer still stands," said Mohammed al-Fassi, a field commander for the National Transitional Council (NTC), outside the town.
"The offer is that people who committed crimes in Col Gadafy's name will be put under house arrest until the new government is formed. Some of them have accepted this but others said no." Asked whether the NTC was considering taking Bani Walid by force, Mr Fassi said: "There is no other option".
A flurry of weekend talks with Bani Walid tribal elders failed to make headway and that effort appears to be over.
"As chief negotiator, I have nothing to offer right now. From my side, negotiations are finished," Abdallah Kanshil said at a checkpoint some 60km outside Bani Walid.
"They said they don't want to talk, they are threatening everyone who moves. They are putting snipers on high-rise buildings and inside olive groves, they have a big fire force. We compromised a lot at the last minute," he said.
It would be up to the NTC to decide what to do next, he added.
NTC officials have suggested that sons of Col Gadafy or even the former leader himself may be hiding in Bani Walid, which like other besieged towns is cut off from normal communications.
The region around Bani Walid is traditionally pro-Gadafy. In the nearby town of Tarhouna, Gadafy-era green flags were still flying not far from the NTC's red, green and black flags.
The head of Col Gadafy's security brigades, Mansour Dhao, has appeared in Niger, Al Arabiya television reported today. About 10 people were travelling with Dhao, Arabiya reported.
The government of Niger, a southern neighbour of Libya, has long had ties with Tripoli. Niger recognised Libya's National Transitional Council on August 27th, after Tripoli fell to fighters seeking to oust Col Gadafy.
Elsewhere, NTC forces have also closed in on Col Gadafy's birthplace in Sirte, which lies across Libya's main east-west coastal highway.
A United Nations official said yesterday he was worried about humanitarian problems in besieged Gadafy-held areas. "We are looking very closely at the situation in Sirte," said Panos Moumtzis, UN humanitarian coordinator for Libya.
“We are preoccupied about the protection of civilians in this area. We understand there is a dialogue taking place. We would really like to see a peaceful solution as fast as possible."
In Tripoli, life was returning to normal after Nato-backed rebels drove Col Gadafy out on August 23rd after a six-month civil war.
The NTC, trying to bring those heavily-armed fighters under control, has announced plans to integrate 3,000 of them into the police force and find jobs for others. Officials also promised schemes to retrain and reintegrate those who fought for the regime.
The disintegration of Col Gadafy's rule war has left a security vacuum in Libya, with many former rebel fighters outside any formal structure, and huge quantities of unsecured weapons.
After chasing out Col Gadafy from his Tripoli compound last month, Libya's new rulers are trying to control the entire country and restore normality.
But in an early sign of divisions, Ismail al-Salabi, a Libyan Islamist military commander who fought Col Gadafy's forces called on the interim cabinet to resign because they were "remnants of the old regime.
A spokesman for Col Gadafy, who has been in hiding since his foes seized Tripoli on August 23rd, has dismissed talk of surrender and said powerful tribal leaders were still loyal to him.
Reuters