Forces loyal to Libyan leader Muammar Gaddafi rained artillery shells Wednesday on a rebel position near the key oil town of Ras Lanuf in the east of the country, AFP reporters said.

At least 20 shells slammed mid-afternoon near a checkpoint just five kilometres (three miles) west of rebel-held Ras Lanuf, the reporters said, adding that there were no immediate reports of casualties.

The first shells fell about 300 metres (yards) west and south of the rebel checkpoint.

The rebels retaliated by firing some 40 Katyusha rockets from launchers mounted on two trucks as well as two anti-aircraft missiles, the reporters said.

One of the missiles struck a telephone relay antenna some two kilometres away, while huge clouds of black smoke could been seen some 10 kilometres further west, suggesting they had hit a more distant target.

One of the rebels marked the moment by playing a revolutionary song full blast on a loudspeaker, with lyrics which said: "We will stay here until the pain in over."

The skirmish came as rebels and pro-Gaddafi forces dug into defensive positions in eastern Libya.

An AFP reporter saw some 200 rebel fighters spread out on small hills around the main coast road between Ras Lanuf and Bin Jawad, some 30 kilometres (19 miles) to the west.

"Today, we have established defensive positions ahead of here," rebel Colonel Masud Mohammed told reporters some five kilometres from Ras Lanuf.

"Gaddafi's forces are in Bin Jawad, they are occupying the mosque and the school," he said. "Today we are not attacking yet."

He also said there were four airstrikes by government warplanes near Bin Jawad earlier Wednesday. Several rebels were wounded, he said, but gave no further details.

The colonel said "heavy shelling" on Tuesday had pushed back the lightly-armed rebel fighters as they advanced towards Bin Jawad, which the inexperienced insurgents had entered on Sunday but failed to hold after being ambushed by pro-Gaddafi militia.

Rebels then moved the reporters back, saying it was not safe to stay.

The rebels earlier said their own forces were 20 kilometres west of Ras Lanuf, while the government troops had not moved from Bin Jawad, where a rebel spokesman said Tuesday they had dug themselves in.

At the last checkpoint a letter from Libyan Muslim scholars was read aloud through a megaphone, expressing support to the fighters, but urging them to be disciplined.

"Follow orders, obey the commanders in the field, do not make chaotic movements," the letter read.

The speaker then shouted to the rebels, "Guys, disperse."