Libyan government forces shelled the key oil town of Ras Lanuf on Thursday, advancing from the west under heavy fire as medics evacuated the hospital and rockets exploded near a mosque.

Rebels fighting to end Moamer Gaddafi's four-decade grip on power captured the town only seven days ago, but have since been forced to retreat from terrain captured further west in their bid to march on Tripoli.

Gaddafi forces now appear to have won back momentum, firing shells on the outskirts of town and up to two rockets landed around 500 metres (yards) from the hospital, where a doctor said at least four rebels were wounded.

Katyusha rockets smashed into the town centre, exploding near the hospital and a mosque, just minutes after rebels ended prayers.

One projectile smashed through the outer wall of the central residential compound and left smouldering shrapnel in a crater. As the rockets got closer, medics evacuated the hospital on foot and crushed into ambulances.

"They're getting too close. Some of us are still there, but a lot of us are pulling out. They're getting too close," shouted one rebel.

The shelling got steadily closer to Ras Lanuf all day, moving from several kilometres to the west, to the edge of town and then towards the centre.

In scenes of panic and frustration, one rebel blamed the attack on talking too freely to journalists reporting live on the ground.

"Please, please stop talking to journalists giving away our military secrets. You're puttting our lives in danger. Whoever has an RPG, we need you to go to the front," he shouted into a megaphone.

West of Ras Lanuf, mortars and Katyusha rockets smashed into the desert on both sides of the highway, as some rebels retreated and others walked towards the front, armed with little more than Kalashnikov rifles.

Jaber, an ambulance driver parked on the roadside west of Ras Lanuf, told AFP the shelling was so heavy it was impossible to recover the wounded.

Gaddafi's forces had "even stopped ambulances from getting there. There are injured. We can't reach them," he said.

An AFP video reporter sheltered in a ditch with four fighters, one of whom was unarmed, behind a sand bank.

One shell exploded 10 metres (yards) away and they came under sniper fire, apparently from Gaddafi forces based on a ridge about 500 metres away.

From that position about six kilometres west of Ras Lanuf, those men in the ditch were the only rebels that the AFP video correspondent could see.

About 10 rockets were fired from government positions into an orchard three kilometres (about two miles) west of Ras Lanuf, where trees went up in flames.

On the other side of the road, two pick-up trucks mounted with machine guns crashed into each other as they revved up in panic to retreat.

"Where the hell are you going? You're going to die a useless death," one rebel soldier shouted at a group walking head-long into the shelling, carrying just Kalashnikovs.

There were pockets of rebels along the road, scattered in various locations but no large gathering was visible.

AFP reporters said smoke still plumed out of an oil facility on the outskirts of Ras Lanuf, where a series of massive explosions erupted into giant fire balls on Wednesday, but that live flames were no longer visible.

Roughly eight kilometres east of Ras Lanuf, a Libyan fighter jet carried out an air strike that appeared to target rebel positions in the desert.

The warplane was heard roaring low in the sky before a plume of smoke shot onto the horizon. The missile appeared to land in the desert, but it was not immediately clear whether there were any casualties or damage.

"We have four injured, two of them seriously," doctor Abdul Azim al-Saiti told AFP at Ras Lanuf hospital before the evacuation.

Rebels on the western outskirts of town opened fire towards a plane flying overhead with anti-aircraft gun as the loudspeaker fixed to the minaret on the mosque cried out: "God is greater, there's no God but Allah."