TRIPOLI - Heavy fighting has escalated in the al-Mansoura district and has focused in at Gaddafi's compound in Bab al-Azizya between government forces and opposition fighters.
Gaddafi's forces are reportedly using heavy weapons including mortars, as Libyan oppostion forces continue to push to gain control of the city.
Al Jazeera's James Bays reporting from Tripoli said "the battle is certainly not over" and "the city is on knife's edge".
Saif al-Islam, the son of Libyan leader Muammar Gaddafi, who was reported to have been captured by opposition forces, appeared in al-Mansoura early on Tuesday morning, raising questions on the streets of Tripoli over rebel claims about the extent of their control over the Libyan capital.
"There is confusion among the ranks of opposition fighters on the ground," Al Jazeera's Zeina Khodr reporting from Tripoli said. "Some people are asking whether the National Transitional Council has been infilitrated."
The head of Libya's opposition National Transitional Council (NTC) on Monday announced the end of Gaddafi's decades-long rule after rebel fighters had swept into the heart of Tripoli on Sunday night, prompting scenes of jubiliation.
But the re-appearance of Saif, an influential figure who is wanted by the International Criminal Court, in front of a crowd of supporters and fresh bouts of fierce fighting have thrown doubt on opposition claims that the city had fallen.
Saif also spoke to foreign journalists at the Rixos Hotel, telling them that Tripoli was in government hands and that his father, whose whereabouts is still unknown, was safe.
Waheed Burshan, an NTC member, told Al Jazeera: "We had confirmation Saif al-Islam was arrested, but we have no idea how he escaped."
Al Jazeera's Jacky Rowland reporting from Benghazi said: "Now we are seeing accusations, doubts, and confusion.
"It is going to be interesting to see how the NTC explains this debacle and how it seeks to reinforce and strengthen these alliances and enable the rebels to get to Tripoli itself."
The NTC held a joint press conference in Benghazi with Ahmet Davutoglu, the Turkish foreign minister on Tuesday.
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"We stand by NTC leader Mustafa Abdel Jalil ... He established the path for Libya for the future," Davutoglu said.
The celebrations that followed the rebels push into central Tripoli on Sunday night, when opposition force took control of the Green Square and claimed victory, gave way to caution and confusion on Monday as they were met by resistance.
Throughout Monday, there was gunfire near Bab al-Azizia, Gaddafi's sprawling compound, in western Tripoli.
Rebels set up checkpoints throughout the neighbourhoods in an attempt to maintain law and order.
"While Gaddafi's forces have withdrawn from most areas of Tripoli, sleeper cells haven't," Khodr said.
Gaddafi supporters also remained in control of the Rixos hotel, where foreign correspondents have been based throughout the six-month conflict.
Snipers scattered across the city continued to wage resistance, while a rebel convoy was ambushed by Gaddafi loyalists using anti-aircraft weapons.
An opposition fighter told Al Jazeera: "We haven't been able to launch an attack we are waiting for more men and heavy weapons."
Elsewhere in the country, the US military said that its warplanes had shot down a scud missile fired from Sirte, Gaddafi's hometown, indicating that remnants of Gaddafi's forces were continuing to resist.
Moussa Ibrahim, the government spokesperson, claimed Gaddafi forces had control of at least 75 per cent of Tripoli. But rebels said Gaddafi supporters only held about 20 per cent of the city.
The tenuous nature of the rebel's grip on Tripoli has dampened rebel hopes of a swift victory and raised concerns that the city of two million people could be the stage for a protracted armed struggle.