Gaddafi forces pushed ahead to retake the strategic town of Ajdabiya, the gateway to the opposition stronghold of Benghazi, after forcing the rebels to retreat from the oil town of Brega.
Reports from the east said rebel fighters came under heavy artillery fire from the advancing government forces in Ajdabiya, 860 kilometres east of Tripoli.
Libyan rebels claimed to have pushed back an advance by Gaddafi's forces into Misurata, 214 kilometres east of Tripoli where five people killed in the fighting.
Fierce street fighting was witnessed as Gaddafi''s forces mounted an assault on the eastern part of Misurata, the lone major rebel stronghold in the west of the country.
Amid warnings that the situation in Libya was reaching a stalemate, the African Union began a key diplomatic mission to end the crisis.
A group of African Union leaders, including South African President Jacob Zuma, will visit Libya and meet Gaddafi in Tripoli and opposition''s Interim Transitional National Council in Benghazi tomorrow to seek an immediate end to the conflict.
"Key on the agenda of both meetings will be the immediate implementation of a ceasefire from both sides and the opening of a political dialogue between the two parties," the South African foreign ministry said in Johannesburg.
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.
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 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 on Apr 9.
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.
The AU panel, which will visit Tripoli tomorrow, includes leaders of Congo, Mali, Mauritania, South Africa and Uganda. The panel will demand an immediate ceasefire, the South African foreign ministry said.