By Michael Georgy and Maria Golovnina
TRIPOLI (Reuters) - Libyan leader Muammar Gaddafi's son told rebels on Thursday they faced a full-scale assault to crush their three-week-old uprising as troops, tanks and warplanes punched into the rebel-held east of the country.
"It's time for action. We are moving now," Saif al-Islam told Reuters in an interview. "Time is out now...we gave them two weeks (for negotiations)."
As he spoke, Gaddafi's forces intensified their counter-attack on the insurgent heartland, bombarding rebel positions in the oil port of Ras Lanuf. Warplanes also hit Brega, another rebel-held oil hub further east.
Gaddafi forces and rebels also fought in the streets of the western town of Zawiyah, close to Tripoli, which has changed hands several times in recent days. Residents described scenes of carnage, with women and children among the dead.
As the military momentum appeared to turn against the rebels, who had set their sights on advancing to the capital, foreign powers were at odds over how to end the turmoil and force Gaddafi out.
Gulf Arab countries said Gaddafi's government was no longer legitimate and France and Britain jointly called on the European Union to recognize the rebel council based in Benghazi.
Despite a flurry of meetings, foreign governments came no closer to deciding on action. The United States and NATO's head expressed doubt over the wisdom of imposing "no-fly zones" without full international backing and a legal justification.
The African Union rejected any form of foreign intervention but said it was sending a delegation of five heads of state to Libya soon to try to arrange a truce in the hostilities.
In a sobering view of the bloodiest of the uprisings now shaking the Arab world, U.S. National Intelligence chief James Clapper said in Washington that Gaddafi was "in this for the long haul" and was likely to prevail.
London-educated Saif al-Islam Gaddafi, previously seen as a potential reformer, said in the interview that Libya would defeat the rebels even if Western powers intervened.
"We will never ever give up. We will never ever surrender. This is our country. We fight here in Libya," he said, speaking in a compound in Tripoli. "Libya is not a piece of cake."
He described rebels fighting to end Gaddafi's 41-year rule as terrorists and armed gangsters and said thousands of Libyans had volunteered to fight them. But in less belligerent mode, he also professed his own desire for democracy and freedom.
"We want to have a new structure, a new system, new parliament, new government, we have a draft ready," he said.
BOMBARDED FROM AIR AND SEA
More than 500 km (300 miles) east of Gaddafi's stronghold, warplanes and gunboats bombarded rebels in Ras Lanuf. Missiles crashed near a Libyan Emirates Oil Refinery Company building.
Rebel fighters said Ras Lanuf's residential district, including the hospital area, weathered a bombardment and one said government forces advanced into the area.
Rebels also reported an air strike on Brega, another oil port 90 km (50 miles) east of Ras Lanuf, indicating that Gaddafi loyalists had not only halted the insurgents' western push but were making inroads into their eastern rearguard.
The rebels fired anti-aircraft guns toward warplanes and rockets out to sea toward naval ships, without visible effect.
State television said rebels were ousted on Thursday from the port and airport of Es Sider, another oil terminus about 40 km (25 miles) west of Ras Lanuf.
The poorly equipped rebels conceded they were struggling to hold ground against the government's vastly superior firepower.
"(Gaddafi) might take it. With planes, tanks, mortars and rockets, he might take it," said rebel fighter Basim Khaled.
"A no-fly zone would be great," rebel fighter Salem al-Burqy said, echoing the view of many comrades.
In the west, Gaddafi's troops laid siege to Zawiyah to try to starve out insurgents clinging to parts of the shattered city after see-saw battles this week.
One fighter said rebels had retaken the heart of Zawiyah from the army overnight. Authorities have kept journalists away from the town, about 50 km (30 miles) west of Tripoli.
The rebels received a boost in their quest for international legitimacy when France recognized their Libyan National Council. An aide to President Nicolas Sarkozy said an ambassador would go to Benghazi and a Libyan envoy would be received in Paris.
Sarkozy and British Prime Minister David Cameron said Gaddafi and his clique had lost legitimacy and must step down.
In a joint declaration sent to the president of the European Union Council, they said plans must be made to help the insurrection, including a no-fly zone over Libya. They urged the European Union to recognize the rebel national council.
URGING BUT NO ACTION
But EU foreign ministers meeting in Brussels could not agree whether the bloc as a whole should recognize the Benghazi-based rebel council, although they did decide to tighten sanctions on Gaddafi's government.
In separate talks, NATO foreign ministers discussed imposing a no-fly zone over Libya to stop the government using air power against the outgunned rebels.
NATO Secretary-General Anders Fogh Rasmussen said this could happen only with a demonstrable need, a clear legal basis and firm regional support, not all of which now apply. This would require evidence of war crimes against civilians.
"We strongly urge the government of Libya to stop violence and allow a peaceful transition to democracy," he said.
The United States, scarred by costly and controversial wars in Iraq and Afghanistan, appeared to be backing away from military action in another Muslim country.
U.S. Secretary of State Hillary Clinton said international consensus was needed for the next steps on Libya.
"Absent international authorization, the United States acting alone would be stepping into a situation whose consequences are unforeseeable," Clinton said.
She also expressed doubts about proposals to set up a no-fly zone over Libya, saying previous such zones set up over Iraq and Serbia had had little effect.
But Gulf Arab ministers meeting in Riyadh called on the Arab League to take measures to stop the bloodshed, including the imposition of a no-fly zone to protect civilians.
In Geneva, the International Committee of the Red Cross said Libya had descended into civil war with increasing numbers of wounded civilians arriving in hospitals in the east.
(Additional reporting by Tom Pfeiffer in Benghazi, Luke Baker, David Brunnstrom, Missy Ryan and Lucien Toyer in Brussels, Paul Eckert and Tabassum Zakaria in Washington, Stefano Ambrogi and Olesya Dmitracova in London, John Irish in Paris, Stephanie Nebehay in Geneva; writing by Angus MacSwan; editing by Tim Pearce)