Rebels bombarded buildings filled with pro-Gadhafi forces hiding amid civilians in a ferocious battle on Thursday in Tripoli, as the hunt for the longtime Libyan leader continues on Thursday.

Explosions rocked the capital and sniper fire filled the air clogged with smoke from burning buildings as one thousand rebel fighters continued to seize the city.

Moammar Gadhafi still refused to surrender and told a local television channel on Wednesday, apparently by telephone, that he vowed to fight on "until victory or martyrdom."

"Don't leave Tripoli for the rats. Fight them, fight them, and kill them," the tyrannical dictator said on a message broadcast on Al-Rai television.

Gadhafi, who is in hiding, called for loyal tribes outside of the capital "to continue their march to Tripoli." He also said that imams in mosques should call for youths to rise up for jihad.

A $2-million bounty for the fugitive leader was announced on Wednesday by rebel leaders.

Moussa Ibrahim, a Gadhafi spokesperson, told The Associated Press that Gadhafi is capable of continuing resistance for "weeks, months and years."

On Wednesday, an attack on rebel fighters occurred as the fighters were advancing toward the town of Bin Jawad, 560 kilometres southeast of Tripoli. At least 20 rebel fighters were killed, said Ahmed Zeleity, a rebel field commander.

Zeleity said that the pro-Gadhafi forces had been among those who fled from the oil city of Ras Lanouf after it was captured earlier this week.

Khadija Ali, a freelance journalist in Tripoli, said that there are still pockets of resistance from regime forces and that it's not safe in the capital.

"There are a Libyans, even Libyan women, fighting for Gadhafi, not just mercenaries," she told CTV News Channel on Thursday afternoon.

As the search for Gadhafi pushes on, there is speculation that he might be in his hometown of Sirte.

The leader of Libya's opposition government told The Associated Press on Wednesday that Gadhafi might be in Sirte but acknowledged that capturing the city would not be easy. Gadhafi's fellow tribesmen are expected to put up a fight for the city about 400 kilometres from Tripoli.

Deputy defence minister Fawzi Abu Ketf of the rebel National Transitional Council told The Associated Press that supplying troops at the front in Sirte would also be a challenge.

"The supply lines will be too long and we are short of funds and supplies," he said.

Rebels have also seized several parts of another Gadhafi stronghold, Sebha, including the main commercial street, according to Abdel al-Zintani from the National Transitional Council.

He said that mercenaries paid by Gadhafi have fled Sebha, a desert city about 650 kilometres from Tripoli, but loyal soldiers are continuing to hold firm.

He also said that there are lengthy power and water outages.

On Tuesday, Gadhafi's compound in Tripoli was overtaken by rebels, effectively destroying the symbol of his 42-year-old dictatorship.

Ali said that Libyans want to see Gadhafi caught and put on trial.

"Justice has to be served," she said. "Everybody wants to get this country off on the right food and they don't want him to be killed."

Rebels seek funding

The head of Libya's rebel Cabinet is meeting on Thursday with Italian Premier Silvio Berlusconi in search of funds.

The Libyan opposition say they need at least $5 billion in frozen assets to pay state salaries, maintain vital services and repair oil facilities.

The U.N. Security Council is preparing to vote this week on a resolution that would release $1.5 billion in Libyan assets in U.S. banks. The world body froze the assets to thwart Gadhafi.

With files from The Associated Press