The tanks rolled into Zawiyah after days of pitched battle between the loyalists and rebels, which according to residents have reduced large parts of the town to rubbles with unclaimed bodies strewn all over, Al-Jazeera reported.
US President Barack Obama and British Prime Minister David Cameron discussed a possible no-fly zone over Libya but both countries maintained that any intervention must have wide international support.
But US Secretary of State Hillary Clinton made it clear that "any decision to impose a no-fly zone over Libya should be made by the UN and not by US."
As the possibility of international intervention grew, the Libyan strongman Gaddafi hit back warning that his people would take up arms if such a zone is imposed by the western nations or the UN.
Unfazed by an ultimatum served on him by the rebels to step down within 72 hours, Gaddafi, in his interview to Turkish TV, said a no-fly zone would show the true intention of the Americans and their European allies to "colonise Libya and seize its oil wealth".
68-year-old Gaddafi also appealed to the people in the east, who have shunned him, to rise and topple the members of the newly-formed rebel Libyan National Council.
Al-Jazeera reported that Gaddafi had not deployed a major portion of his elite army regiments and was holding them to confront a feared western invasion.
Gaddafi was shown walking into a five-star hotel in the capital Tripoli to give interview to state TV and the Turkish TV.
His comments came amid reports that rebels had served him an ultimatum to step down within 72 hours.
"If he leaves Libya immediately, during 72 hours, and stops the bombardment, we as Libyans will step back from pursuing him for crimes," Mustafa Abdel Jalil, head of the opposition National Council, told Al-Jazeera.
"Conditions are that firstly he stops all combat in the fields, secondly that his departure is within 72 hours; thirdly we may waive our right of domestic prosecution ... for the crimes of oppression, persecution, starvation and massacres," Jalil said.
The offer came as reports said Gaddafi had sent feelers to the opposition movement, expressing willingness to negotiate his exit.