By Hamid Ould Ahmed and Mariam Karouny
ALGIERS/BEIRUT (Reuters) - Rebels in the Libyan city of Misrata scorned reports Muammar Gaddafi had agreed to a ceasefire on Monday after his forces fired rockets on the city and fought intense house-to-house battles.
African mediators said late on Sunday the Libyan leader had accepted a peace plan which included a ceasefire, but hours later Misrata, where anti-Gaddafi rebels have been fighting off attacks for weeks, came under renewed bombardment.
For the first time in Misrata, rebels said, pro-Gaddafi forces used Russian-made Grad rockets -- munitions fired in multiple rounds from launchers on the back of trucks, which take their name from the Russian word for "hail."
"This is a new escalation and a new level," rebel spokesman Mahmoud Amloda told Reuters by telephone. "We do not see any sign of a ceasefire. We do not want war. But what choice do we have? We have to defend ourselves. He (Gaddafi) is destroying everything like a madman and causing havoc."
Misrata, 200 km (130 miles) east of Tripoli, is the country's third biggest city and the last big rebel stronghold in the west of Libya.
Surrounded on three sides by troops, with the Mediterranean port the only lifeline, it has been subjected to weeks of shelling and sniper fire, steadily forcing the rebels back into a shrinking area of the city still under their control.
New York-based Human Rights Watch said in a report it had documented about 250 deaths -- most of them of civilians -- from the fighting in Misrata over the last month.
Accounts from Misrata could not be independently verified because Libyan authorities have prevented journalists from reporting freely from the city. Libyan officials deny attacking civilians there, saying they are fighting armed gangs and al Qaeda sympathizers bent on destroying the country.
Another rebel spokesman called Abdelsalam told Reuters battles had broken out at the eastern entrance to the city and in the center along Tripoli Street, the main thoroughfare.
"Heavy and fierce fighting is now taking place," he said.
He quoted medical workers as saying three people were killed in Monday's fighting. He said shelling in the early hours of the morning hit an area near the rebel-controlled port. "About 4,000 refugees were staying near the area which was hit in the bombardment, but fortunately nobody was hurt," he said.
Libyan television showed what it said was live footage of a pro-Gaddafi demonstration in Misrata. The crowd, made up of men, women and children, chanted slogans and waved Gaddafi pictures.
Abdelsalam said food and medicine had run short and people had been forced to flee their homes to escape the fighting, crowding into the houses of friends and relatives in other parts of the city.
"This has become a ghost city," Abdelsalam said. "Most residents fled to stay in houses in relatively safe areas. There are about five to six families in each house.
"Water is still cut off, there is no electricity. There is also a shortage of medical equipment and food. There is no sign of baby milk. People are terrified."
(Additional reporting by Joseph Nasr; writing by Christian Lowe; editing by Andrew Roche)