Snipers, cluster bombs and intense shelling is spreading panic in Misrata, an AFP reporter said, as a doctor reported 1,000 people killed in six weeks of fighting in the besieged city.
The International Organisation for Migration (IOM) warned that the vast numbers wanting to flee the city, about 215 kilometres (130 miles) east of Tripoli, was threatening to overwhelm an international sea rescue operation.
On the political front, Britain insisted that it would not send ground forces into Libya.
"What we've said is there is no question of an invasion or an occupation, this is not about Britain putting boots on the ground, this is not what we are about here," Prime Minister David Cameron told Sky News.
The administrator of the main hospital in Misrata, Dr Khaled Abu Falgha, told reporters that 17 people were killed in the city on Sunday.
In all, 1,000 people are estimated to have been killed in the fighting that broke out in Misrata nearly six weeks ago, while another 3,000 people have been wounded.
"Eighty percent of the deaths are civilians", Abu Falgha said.
Saif al-Islam Kadhafi, son of the Libyan leader who is battling a rebellion, denied civilians were being targeted.
"We didn't commit any crime against our people," he said in an interview with The Washington Post reported Sunday.
The 38-year-old Saif told the Post in an hour-long interview in Tripoli that evidence of Libyan forces firing on anti-government demonstrators is false, likening it to reports of pre-war Iraq hiding weapons of mass destruction.
"It's exactly like the WMD," he said. "WMD, WMD, WMD, go and attack Iraq. Civilians, civilians, civilians, go and attack Libya. It's the same thing.
"I am not going to accept it, that the Libyan army killed civilians. This didn't happen. It will never happen."
NATO is currently enforcing a United Nations-approved no-fly zone designed to protect Libyan civilians. Western allies have called for the end of Kadhafi's four-decade rule.
Hospital administrator Abu Falgha said the last week has seen worsened injuries from cluster bombs, requiring many amputations in Misrata. He showed examples of the weapons kept in his office.
Cluster bombs, which spray deadly bomblets indiscriminantly over a large area, are banned by most countries.
Snipers too are spreading fear on the streets as victims are struck down randomly.
Among them is 10-year-old Mohammed, who writhes in his bed at the hospital, his eyes are open but he is not conscious. It's unlikely he ever will be conscious again.
"It was a high-velocity bullet. It went in the left side of his head and out the other side, taking brain matter with it," Dr Abdul Kather Muqtar explained in the intensive care unit.
With residents feeling less and less safe, many want to leave but the only way out is by sea as Kadhafi's forces surround the city.
The arrival on Sunday off Misrata's port of a Greek ferry chartered by the International Organisation for Migration (IOM) saw hundreds of panicked refugees blocking a key road to the harbour and demanding to be allowed aboard, witnesses said.
Jeremy Haslam, heading up the IOM mission in Libya, said the situation was eventually calmed by the rebels manning checkpoints at the port, with some of the Libyans being allowed on the ferry.
But he said he was worried the movement could be just the tip of the iceberg of an attempted mass escape by sea by many of Misrata's 400,000 residents.
Such an exodus would overwhelm the evacuation operation mounted by the IOM, the Qatari government and the French group Doctors Without Borders, he warned.
The current plan calls for the IOM and other organisations to take non-Libyan refugees from Misrata -- mostly Egyptians, Chadians, Ghanians and people from Niger -- to a transit camp in the eastern rebel stronghold of Benghazi, where they would be sent to Egypt for repatriation.
The ferry, chartered by the IOM, is carrying 500 tonnes of humanitarian aid, both medical and food, as well as four ambulances and three doctors who are to replace colleagues, Haslam told AFP.
He said the IOM was hoping to take on 1,000-plus refugees packed around the port.
"We hope to target the most vulnerable, West Africans, mostly from Chad and Niger, who are the least looked after by the local population," Haslam said.
The IOM has identified some 10,000 non-Libyan refugees waiting to leave and who are camping out around Misrata without adequate shelter, clean water or food and no medical care.
In the east, regime forces bombarded rebels west of Ajdabiya, forcing hundreds of residents and some fighters to flee the key crossroads town.
The intense pounding of Ajdabiya Sunday came a day after at least eight people were killed and 27 wounded as the forces loyal to Libyan strongman Moamer Kadhafi fired rockets at rebel positions there, hospital officials said.