After forcing the rebels to retreat from the oil town of Brega, Gaddafi's tanks and heavy artillery are pushing ahead to retake Ajdabiya which lies midway between Brega and Benghazi.
On the western front, Libyan rebels claimed to have pushed back an advance by Gaddafi''s forces into Misurata, with five people killed in the fighting for the besieged city.
Fierce street fighting was witnessed as Gaddafi's forces mounted an assault on the eastern part of the port city that is the only major rebel stronghold in the west of the country.
Reports from the east said rebel fighters came under heavy artillery fire from the advancing government forces in of Ajdabiya.
The last few weeks have seen a military stalemate grow in the east with both sides advancing and retreating across enemy lines. Coming under heavy shelling, the rebels had retreated from the outskirts of Brega and were struggling to hold their ground.
In Ajdabiya as well, intense artillery fire was making lives difficult for the rebels.
Misurata has been the centre of a weeks-long siege with the rebels managing to hold out to their major western post in the face of an advancing Libyan military in other parts of the country.
Severe shortages of food, water and medical supplies are being experienced by the besieged people and hospitals are overflowing with patients, Al Jazeera reported.
Terrified people are crammed into the few remaining safe districts -- five families to a house -- to escape incessant mortar and rocket fire.
A resident was quoted as saying that five people were killed and 10 others were wounded in the fighting today.
A rebel spokesman said government troops had advanced on the heavily populated Esqeer district in an effort to loosen the rebels'' grip on Misurata.
He said the attack had been repelled and the forces pushed back for now.
With the situation in Libya descending into a stalemate, international voices are growing in favour of seeking a ceasefire and a political solution.
A group of African Union leaders, including South African President Jacob Zuma, will visit Libya this weekend and meet representatives of both sides.
The South African foreign ministry said that the AU panel will meet Gaddafi in Tripoli and rebel leaders in Benghazi to seek an immediate end to the conflict.
The panel, which includes leaders of Congo, Mali, Mauritania, South Africa and Uganda, had been scheduled to visit Libya last month but had to cancel the trip after failing to obtain permission to enter the country as Western nations began implementing a no-fly zone.
Before starting their visit to Libya, the leaders will first meet in Mauritania.
Meanwhile, weapons depots belonging to Gaddafi's forces near the town of Zintan were hit by NATO air strikes yesterday, and residents said they saw the buildings on fire.
Al Jazeera said rebels at the western boundary of Ajdabiya, still jittery after the friendly fire accident, fled from an artillery bombardment though there was no immediate sign of a government advance.
The NATO strikes have not done much to help the rebel advance as was being hoped earlier and NATO leaders have acknowledged the limits of their air power particularly with Gaddafi's forces tactics of placing their weaponry in the middle of civilian areas.
NATO chief Anders Fogh Rassmussen expressed regret over the deaths in the rebel camp by an alliance air strike, terming the incident as "unfortunate".
"The situation on the ground is very fluid," Rasmussen said. "We have seen in the past that tanks have been used by the Gaddafi regime to attack civilians."