NATO air strikes helped stop a major assault by Libyan forces loyal to Moammar Gadhafi on the rebel-held town of Ajdabiyah on Sunday.
NATO said it had hit 11 tanks outside the eastern town and six burned-out hulks could be seen on its western approaches. A Reuters reporter saw 15 charred bodies scattered around two sites about 300 metres apart.
NATO said it also destroyed 14 Gadhafi tanks on the outskirts of Misrata, a lone rebel bastion in western Libya which has been under siege for six weeks and where conditions for civilians are said to be desperate.
Earlier on Sunday the rebels seemed to be losing control of Ajdabiyah after the heaviest government assault for at least a week. The attack, which began on Saturday, included a fierce artillery and rocket bombardment while some of Mr. Gadhafi's forces, including snipers, penetrated the town.
Rebels had for several hours cowered in alleyways in the town, which is a gateway to their stronghold city of Benghazi 150 km up the Mediterranean coast to the north.
The corpses of four rebels were found dumped on a roadside.
"Their throats were slit. They were all shot a few times in the chest as well. I just could not stop crying when I saw them," said rebel Muhammad Saad. "This is becoming tougher and tougher."
But by afternoon rebels looked back in control of Ajdabiyah, commanding key intersections, and the artillery and small arms fire had died down.
BLOODSTAIN
One rebel showed a Reuters reporter a big bloodstain in a schoolroom where he said an Algerian sniper had hidden. He shot himself in the neck when he was surrounded by insurgents, rebel Hazim Ahmed said.
Ajdabiyah had been the launch point for insurgents during a week-long fight for the oil port of Brega 70 km further west, and its fall would be a serious loss.
A high-level African Union delegation led by South African President Jacob Zuma arrived in Tripoli on Sunday to try to start peace talks between the two sides.
South African officials said the delegation, which included the leaders of Mauritania, Congo, Mali and Uganda, would meet insurgent leaders in Benghazi after talking to Mr. Gadhafi.
Western officials have assessed that their air power will not be enough to help the rag-tag rebels overthrow Mr. Gadhafi by force and they are now emphasizing a political solution.
But a rebel spokesman rejected a negotiated outcome in the conflict, the bloodiest in a series of pro-democracy revolts across the Arab world that have already dethroned the autocratic leaders of Tunisia and Egypt.
"There is no other solution than the military solution, because this dictator's language is annihilation, and people who speak this language only understand this language," spokesman Ahmad Bani told al-Jazeera television.
Analysts predict a drawn-out, low-level conflict possibly leading to partition between east and west in the sprawling North African Arab state, a major oil and natural gas producer.
Mr. Gadhafi's government sought to showcase a reform-friendly face on Sunday, gathering foreign journalists in the early hours of the morning to unveil a "Libyan version" of democracy.
Details were vague and officials could not explain what Mr. Gadhafi's role would be, but it was clear he would continue to play a leading role. Insurgents say they want democracy in Libya without Mr. Gadhafi, who has ruled with an iron hand for 41 years.
PITCHED BATTLES
The fight for Ajdabiyah on Sunday followed pitched battles on Saturday when rebels fought off a heavy assault by government forces on Misrata.
One insurgent there said 30 fighters were killed but another said there were eight confirmed dead and 10 unconfirmed.
Mr. Gadhafi's forces appear bent on seizing Misrata and crucially its port, which some analysts say is vital if Mr. Gadhafi is to survive because it supplies the capital Tripoli.
As fighting raged on, a buoyant Gadhafi made his first television appearance for five days on Saturday.
Wearing his trademark brown robes and dark glasses, he was shown smiling and pumping his fists in the air at a school where he was welcomed ecstatically. Women ululated, one wept with emotion and pupils chanted anti-western slogans.
Mr. Gadhafi looked relaxed, confirming the impression among analysts that his administration has emerged from a period of paralysis and is hunkering down for a long campaign.
NATO's commander of Libyan operations said the alliance, which took over air strikes against Mr. Gadhafi from three Western powers on March 31, had destroyed "a significant percentage" of Mr. Gadhafi's armour and ammunition stockpiles east of Tripoli.
Canadian Lieutenant General Charles Bouchard said after Sunday's air attacks: "The situation in Ajdabiyah, and Misrata in particular, is desperate for those Libyans who are being brutally shelled by the [Gadhafi]regime."
Ajdabiyah is the last major town on the Mediterranean coastal road before Benghazi and the major oil terminal of Tobruk further east. Keeping Tobruk is vital for the insurgents to be able to export crude to fund their uprising.