With the more experienced and better organised rebel army locked in combat with Gaddafi's forces, hundreds of young, inexperienced volunteers could be seen fleeing east towards Ajdabiyah, after coming under heavy mortar and machinegun fire.
A Reuters correspondent at the scene of the air strike saw at least four burnt-out vehicles including an ambulance by the side of the road near the eastern entrance to the town. Men prayed at freshly dug graves covered by the rebel red, black and green flag nearby.
"Some of Gaddafi's forces sneaked in among the rebels and fired anti-aircraft guns in the air," said rebel fighter Mustafa Ali Omar. "After that the NATO forces came and bombed them."
Rebel fighters at the scene said as many as 14 people may have died in the bombing, which they said happened around 10 pm local time (2000 GMT) on Friday.
But at the rebel headquarters in the eastern city of Benghazi, spokesman Mustafa Gheriani told Reuters that the rebel leadership still wanted and needed allied air strikes.
"You have to look at the big picture. Mistakes will happen. We are trying to get rid of Gaddafi and there will be casualties, although of course it does not make us happy."
He could not confirm that rebels had died in the air strike.
In Brussels, a spokeswoman for NATO, which this week assumed command of the military operation launched on 19 March, said the alliance was looking into the reports.
"NATO is always concerned by reports of civilian casualties. NATO's mission is to protect civilians and civilian areas from attack," spokeswoman Oana Lungescu said.
Gaddafi forces fired rockets on Brega overnight and fighting continued further west around the town's university early on Saturday, rebels said.
But at the eastern gate of the town, dust rose from the road as volunteers known as the "shebab", or youth, streamed away in cars after coming under heavy fire from Gaddafi's forces.
The young volunteers have frequently fled under fire, raising questions about whether the rebels will be able to make any headway against Gaddafi's better-equipped and better-trained forces without great Western military involvement.
Brega is one of a string of oil towns along the coast that have been taken and retaken by each side after the U.N. mandated intervention which was intended to protect civilians in Libya.
Rebels have been trying to marshal their rag-tag units into a more disciplined force after a rebel advance along about 200 km (125 miles) of coast west from Brega was repulsed and turned into a rapid retreat this week.
Their stalled campaign has left rebel-held areas in western Libya, notably the city of Misrata, stranded and facing fierce attack from Gaddafi's forces. "They are trying to starve and kill people inside the city by all means," said a British-based doctor who had spoken to his friends in the city earlier on Saturday.
But he said the city was quieter after heavy shelling on Friday. "People are a bit relieved."
On Friday, a rebel leader, speaking after talks with a U.N. envoy in Benghazi, offered a truce on condition that Gaddafi left Libya and his forces quit cities under government control.
The Libyan government dismissed the ceasefire call.
"They are asking us to withdraw from our own cities .... If this is not mad then I don't know what this is. We will not leave our cities," spokesman Mussa Ibrahim told reporters.
State-controlled Libyan television also said that coalition forces bombarded "civilian and military locations" late on Friday in western Libya.
It said the strikes were in the towns of Khoms, between the capital Tripoli and Misrata, and Arrujban, in the southwest.
While Western action has failed to bring any end to fighting or a quick collapse of Gaddafi's administration, there have been reports of contacts between Tripoli and Western capitals.
Foreign Minister Moussa Koussa defected in London this week and a Gaddafi appointee declined to take up his post as U.N. ambassador, condemning the "spilling of blood" in Libya. Other reports of defections are unconfirmed.
A British government source said Mohammed Ismail, an aide to Gaddafi's son Saif al-Islam, had visited family members in London, and Britain had "taken the opportunity to send some very strong messages about the Gaddafi regime."