Libya conflict: Rebels fight for control of Zawiya
Libyan forces loyal to Col Muammar Gaddafi are fighting rebels for control of the coastal town of Zawiya, less than 50km (30 miles) west of Tripoli.
Both government and rebels claim to control the town, which lies on a road linking Tripoli to Tunisia's border.
The opposition has claimed big advances in recent days but the government insists it can re-take the lost ground.
Nato believes pro-Gaddafi troops no longer have the capacity to launch "coherent operations".
Meanwhile, US Defence Secretary Leon Panetta said on Tuesday that Col Gaddafi's "days are numbered", reinforcing the impression among some observers that the six-month conflict is nearing its final stages.
Gaddafi's days numbered?
How much territory the rebels hold and for how long they can hold it remains unclear, correspondents say.
If opposition forces could maintain control of Zawiya, they would have Tripoli surrounded by land, with Nato - which has been enforcing a UN-mandated no-fly zone to protect civilians since March - blocking sea access.
Nato air strikes have helped the rebel advances in recent days.
On Monday, opposition forces advanced into Zawiya and Gharyan, another town straddling an important road 80km to Tripoli's south.
But Col Gaddafi's forces are still thought to control the Zawiya oil refinery - the only one in western Libya - from where they get most of their fuel.
Medics outside Zawiya were quoted as saying sniper and mortar fire from government troops had left three civilians dead in the town.
Mr Panetta said his upbeat assessment of the Libyan opposition was based on recent briefings by US commanders in the region - who had told him anti-Gaddafi forces were making advances in the east of the country, and closing in on Tripoli from the west.
Mr Panetta said this had left government forces weakened - and pointed to the reported defection of Libya's former Interior Minister Nasser al-Mabruk Abdullah as further evidence that military and diplomatic pressure were having an impact.
The rebels have always maintained that if they can reach Tripoli, then opposition supporters across the city would rise up and help defeat Col Gaddafi, but the BBC's Matthew Price says it does not feel that clear-cut in the capital.
While months of war and international sanctions are taking their toll, the Libyan government insists its people are resilient, adds our correspondent.
In an audio message broadcast on Libyan state TV on Monday, a defiant Col Gaddafi appealed to his supporters to "prepare for the battle to liberate" Libya.
Meanwhile, Nato said the firing of a Scud missile by pro-Gaddafi forces did not represent a new or more dangerous threat.
The missile was launched near the coastal city of Sirte and aimed at rebel-held Brega, but landed harmlessly in the desert, US defence officials said.
The alliance had been aware of the weaponry and did not think it would change the operational capability of Col Gaddafi's forces, said Nato spokesman Col Roland Lavoie.
On Tuesday, a UN special envoy, Jordan's former Foreign Minister Abdul-Ilah al-Khatib, denied reports that he had brokered negotiations between the two sides, saying he had only met them separately and informally in Tunisia.
Rebels deny that their National Transitional Council (NTC) - recognised as Libya's legitimate government by many nations - has held peace talks with representatives of Col Gaddafi.
But the BBC understands that talks involving two members of the opposition and two government ministers had taken place in Tunisia.
Venezuelan officials mediated between the two sides at the talks in Djerba, which started over the weekend and finished on Tuesday morning, sources say.