President Barack Obama said on Friday the United States and its allies were "tightening the noose" around Gaddafi and European Union leaders meeting in Brussels said they would consider all options to force the Libyan leader to step down.
However, the 27 leaders meeting in Brussels stopped short of endorsing air strikes, a no-fly zone or other military-backed means to achieve that goal. Libyan rebels said their three-week-old insurrection could fail without a no-fly zone.
The summit sidestepped a British and French initiative for a U.N. Security Council resolution that would authorise a no-fly zone.
They also would not back French President Nicolas Sarkozy's call to follow his lead and recognise the National Libyan Council as the country's legitimate authority, or his call for "defensive" air strikes against Gaddafi's forces if they used chemical weapons or warplanes against civilians.
Libya suspended diplomatic relations with France.
Obama, accused by critics of reacting too slowly, told a news conference he believed international sanctions, an arms embargo and other measures already in place were having an impact but also said a no-fly zone remained an option.
"Across the board we are slowly tightening the noose on Gaddafi. He is more and more isolated internationally," he said. "I have not taken any options off the table."
Soon after he spoke, the U.S. Treasury Department said it had extended a freeze on assets to Gaddafi's wife, four of his sons and four senior officials in his government.
TANKS AND AIR POWER
Gaddafi's forces, with air supremacy and a big advantage in tanks, appeared to be maintaining the momentum on the ground.
The sound of explosions and small arms fire came from the oil port of Ras Lanuf on Friday as government troops landed from the sea, backed by tanks and air power.
Rebels had advanced to the town of Bin Jawad about 60 km (38 miles) west of Ras Lanuf a week ago, but have been driven back across the strip of desert and scrub. Though out-gunned, they have kept up stiff resistance.
"Ras Lanuf is a ghost town. There are skirmishes between rebels and Gaddafi forces going back and forth," said rebel captain Mustafa al-Agoury, adding that rebels were positioned on the east and Gaddafi's forces on the west of the town.
Neither side had full control. Libyan state television said the town was cleared of "armed gangs" opposed to Gaddafi and a spokesman for the rebel movement, Hamid al-Hasi, told Al Arabiya that Ras Lanuf was back in rebel hands.
Gaddafi's warplanes were carrying out air strikes seemingly unhindered by insurgent anti-aircraft guns mounted on pick-up trucks.
Many rebels were angry at international inaction.
"Where is the West? How are they helping? What are they doing," shouted one angry fighter.
In Tripoli, Libyan security forces used teargas and fired in the air to disperse worshippers near a mosque before they could even attempt any protest, a Libyan man said, citing witnesses.
It was impossible to verify reports about what was happening in the Tajoura district of Tripoli because foreign journalists were prevented from reporting from the area and local anti-Gaddafi activists were not answering phone calls.
The revolt in Zawiyah, 50 km (30 miles) west of Tripoli and held by rebels for days against fierce attacks, appeared to have been crushed.
Foreign journalists brought to the city centre by government forces on Friday saw buildings scorched, patches of fresh paint and loyalists chanting "I love Gaddafi".
HOTEL BURNED OUT
A hotel on the square that had been the rebel command centre stood burned out, now guarded by Gaddafi militiamen. Facades not covered by large cloths were pockmarked by bullets from days of battles around the space the rebels called Martyrs' Square.
"There were bad guys inside. There were 35-40 guys there yesterday with Kalashnikovs and big guns," said Waleed, one militiaman, pointing towards the building's ruined facade.
"We cannot live without Gaddafi. He is the king of Africa, not just Libya."
The only town holding out in western Libya was Misrata, about 200 km (125 miles) east of Tripoli. It was calm on Friday, but rebels said they were expecting an attack in the near future.
Libya's insurgent leader said any delay in imposing a no-fly zone could let Gaddafi regain control.
"We ask the international community to shoulder their responsibilities," Mustafa Abdel-Jalil, head of the rebels' National Libyan Council, told the BBC.
"The Libyans are being cleansed by Gaddafi's air force. We asked for a no-fly zone to be imposed from day one, we also want a sea embargo," he said.
About 15,000 worshippers gathered outside the courthouse that has become the council's headquarters in the rebel stronghold of Benghazi.
"Help us to become a democratic country," said one banner strung between lampposts and written in English and Arabic.
The Arab League will discuss the no-fly zone and the idea of extending formal recognition to the rebels at a meeting on Saturday, but experts said divisions among them will likely preclude agreement, disappointing the EU which had been looking to the grouping to help guide their next steps.