The West is edging closer to military action against Muammar Gaddafi as the United States says air strikes will be needed to secure a no-fly zone over Libya, and regime forces tried to retake a key city.
US and European leaders weighed the use of NATO air power to impose a no-fly zone, with the aim of stopping Gaddafi using air power against his own people to crush the insurrection against his four decades of iron rule.
Meanwhile, Gaddafi loyalists, who have lost control of much of the country to the rebellion that started on February 15, tried to retake the key western city of Zawiyah but were pushed back.
Gaddafi's army also moved to re-establish its authority at a border post with Tunisia, to the west, days after leaving the area, witnesses said after returning from the border.
US Secretary of State Hillary Clinton said Libya was at a crossroads in its history and "the stakes are high".
"In the years ahead, Libya could become a peaceful democracy, or it could face protracted civil war" and descend into chaos, she told the House Foreign Affairs Committee.
The UN refugee agency said the situation on Libya's border with Tunisia was reaching crisis point as desperate expatriate workers poured across, fearful of a bloody rearguard action by diehard regime elements.
More than 100,000 have already left the country to escape a vicious crackdown by Gaddafi loyalists which has left at least 1,000 dead, according to conservative UN estimates.
"It is not acceptable to have a situation where Colonel Gaddafi can be murdering his own people, using aeroplanes and helicopter gunships and the like," said British Prime Minister David Cameron, a leading advocate of the no-fly option.
"It's right for us to plan and look at plans for a no-fly zone," he said.
Top US commander General James Mattis told a Senate hearing that any no-fly zone would first require bombing the oil-rich north African nation's air defense systems. "It would be a military operation,"he said.
But France's new Foreign Minister Alain Juppe ruled out military action without a "clear mandate" from the United Nations.
"Different options are being studied -- notably that of an air exclusion zone -- but I say very clearly that no intervention will be undertaken without a clear mandate from the United Nations Security Council," said Juppe.
Although Gaddafi's military is badly out gunned by US and NATO aircraft, the regime has dozens of surface-to-air missiles that could shoot down invading warplanes.
The no-fly option received backing from the exiled crown prince of Libya, Mohammed El-Senussi, who said military action should go no further than that.
"Let me be clear. There is a difference between a no-fly zone and military intervention and the Libyan people do not seek external military involvement on the ground. That will not bring about the peace and freedom that we crave," he said in London, where he has been living since 1988.
Overnight, heavily armed pro-Gaddafi militiamen attempted to retake Zawiyah, a middle-class dormitory town just 60 kilometres west of the capital where several of the veteran leader's lieutenants have homes, residents told AFP by telephone.
But they fell back when they met resistance from armed opposition supporters in control of the city centre.
"Today, it's very calm; I'm able to get around town as normal," one resident said, reached by telephone.
"The militiamen did not enter the city centre. They are still on the outskirts. They are heavily armed and have tanks with them."
The cities of Misrata east of the capital and Gherian to its south also appeared to remain in opposition hands, as was virtually all of the east of the country, including several key oil fields.
Forces at the Wazin border post near Tunisia, which had been deserted by the police and military since Sunday, were reinforced, three witnesses said after returning from the border.
"I saw about 20 troops at Wazin where there were none yesterday," said one of them, asking not to be named.
"They were regular army soldiers, some of them wearing a green scarf around the neck. They were armed with automatic Kalashnikov rifles. There were no tanks."
European Union leaders will gather in Brussels on March 11 for a special summit aiming to deliver a response to the crisis in Libya, and to turmoil in the Arab world, an EU diplomat said Tuesday.
"What is going on -- the massive violence against peaceful demonstrators -- shocks our conscience," said EU foreign policy chief Catherine Ashton.
"It should spring us into action," she added.
Anti-regime leaders in Benghazi said on Tuesday they have formed a military council in the eastern Libyan city, which has become the hub of efforts to topple Gaddafi.
The council, comprising officers who joined protesters against Gaddafi's rule, will liaise with similar groups in other freed cities in the east but it was not immediately clear if there were plans for a regional command.
Oil prices rose Tuesday as Libya's violence sparked global supply jitters, with Brent North Sea crude for delivery in April up $1.75 at $113.55 a barrel.
New York's light sweet crude for April, known as West Texas Intermediate (WTI), gained $1.34 cents to $98.31 a barrel.
And Fitch Ratings said it had cut Libya's credit ratings three notches to a below investment grade rating of BB, due to the turmoil there.
Anger at authoritarian Arab regimes in the Middle East and North Africa raged from Algeria to Yemen and has spread to the previously unaffected Gulf states of Kuwait and Oman.
Huge crowds poured into the centre of the Yemeni capital Sanaa on Tuesday in response to an opposition call for a mass rally against President Ali Abdullah, in power since 1978. That drew angry accusations from him that it was all the work of Israel and the United States.
Saleh dismissed the protests across the Middle East as "a storm orchestrated from Tel Aviv and under Washington's supervision".
In Oman, armoured cars moved in to disperse protesters who have been demonstrating since Saturday in the key industrial area of Sohar, northwest of the capital Muscat, for jobs and reform in the normally placid Gulf sultanate.
Thousands of Bahrainis once again protested in Manama's Pearl Square, the focal point for anti-regime demonstrations over the past fortnight.