Libya's de facto premier Mahmud Jibril warned in his first address in Tripoli that the hardest battles still lay ahead as fighters loyal to the new rulers closed in on Moamer Gaddafi's hometown Friday.
World police body Interpol called for the fugitive Gaddafi's arrest for alleged crimes against humanity, following a request by the International Criminal Court.
"The battle of liberation is not finished," Jibril said late Thursday after National Transitional Council troops inching towards Bani Walid southeast of Tripoli came under rocket fire from old regime loyalists inside the oasis town.
The NTC has set a Saturday deadline for towns still loyal to Gaddafi to surrender, but Jibril warned that its troops would return to the offensive sooner if attacks on them continued.
"We have the right to defend ourselves even before the deadline," he said.
On-off negotiations have been going on for days for the surrender of Bani Walid, where a number of former regime officials, including Gaddafi's spokesman Mussa Ibrahim, are believed to be holed up.
NTC fighters celebrated Thursday after they captured the Red Valley, 60 kilometres (40 miles) east of Sirte, one of the main lines of defence for Gaddafi's troops in Sirte, an AFP correspondent reported.
The fighters killed at least 18 Gaddafi troops there, and sporadic fighting continued on Friday morning, the correspondent reported.
NTC fighters were making house-to-house searches for snipers, the reporter said, adding that he saw three burnt cars and three corpses as combatants made several arrests by displaying green flags to fool and trap Gaddafi troops.
The NTC forces were now discussing plans to capture Harawa, the next town on the road to Sirte, Gaddafi's hometown.
NATO said that on Thursday it struck two armed vehicles, a multiple rocket launcher near Sirte and one surface-to-surface missile facility near Bani Walid.
In a defiant message on Thursday -- his first for several days -- Gaddafi dismissed as lies reports that he had fled to neighbouring Niger, insisting he was still in Libya.
"They have nothing else to resort to apart from psychological warfare and lies," Gaddafi told the Damascus-based Arrai Oruba television.
"We are ready in Tripoli and everywhere to intensify attacks against the rats, the mercenaries, who are a pack of dogs," he said.
Interpol said it had issued a "red notice" for the arrest of Gaddafi, his son Seif al-Islam and his intelligence chief Abdullah al-Senussi, one day after ICC prosecutor Luis Moreno-Ocampo asked for the agency's help.
The "request for Interpol Red Notices will significantly restrict the ability of all three men to cross international borders and is a powerful tool to help in their location and arrest," Interpol chief Ronald Noble said.
"Gaddafi is a fugitive whose country of nationality and the International Criminal Court want arrested and held accountable for the serious criminal charges that have been brought against him," the secretary general said.
Jibril, who refused to speculate on Gaddafi's whereabouts, admitted that the battle for Libya's liberation would end only with the "capture or elimination of Gaddafi."
The NTC fears Gaddafi will try to slip across one of Libya's porous borders, and Niger strongly denied he was there after a convoy carrying other senior ousted regime officials arrived on Monday.
In a bid to sever potential escape routes, the NTC said it had dispatched a team to the Niger capital Niamey, and Washington said Gaddafi aides who entered Niger were being detained.
None of those entering Niger earlier this week appeared to be on a list of persons subject to UN sanctions, US State Department spokeswoman Victoria Nuland said.
"Our understanding is that the convoy included some military and senior officials under Gaddafi's former regime," she said. "They are now being held in the capital... and they are being monitored closely by Nigerien officials."
Human rights group Amnesty International said Libya's neighbours must arrest Gaddafi and others wanted by the ICC if they cross the borders.
Meanwhile, China -- which long propped up the fallen strongman and has extensive business interests in Libya -- said it was ready to help rebuild the north African nation.
"It depends on the needs of the Libyan people themselves, whatever they need we will be willing to help them," said Vice Foreign Minister Cui Tiankai, adding that China will support UN-led reconstruction efforts.
China is a major importer of oil from Libya which produced about 1.6 million barrels per day before the rebellion broke out in February, although output has since slowed to a trickle.