By Maria Golovnina and Michael Georgy
TRIPOLI (Reuters) - An army siege is preventing supplies of food and medicine from reaching insurgents in the western Libyan city of Zawiyah, where residents braced for more street-to-street fighting on Thursday.
NATO and the European Union were considering imposing a "no-fly" zone to stop forces loyal to Muammar Gaddafi using warplanes and helicopters against the insurgents, who have seized some cities east and west of the capital Tripoli.
One fighter said rebels had retaken the heart of Zawiyah, the closest city -- 50 km (30 miles) west -- to Gaddafi's main stronghold Tripoli, from the army overnight. The center appeared to change hands twice during the day in a hard-fought battle.
"We fought until after three in the morning. It's all quiet here this morning," said the insurgent, named Ibrahim, by phone.
Mohamed, a Libyan in exile abroad who got through to a relative on the ouskirts of Zawiyah on Thursday morning, said it was simply not clear who was winning the battle for the city.
"Yesterday they (rebel sympathizers) tried to bring food and medicine from Subratha but they failed. Government troops surround Zawiyah from everywhere," he said.
"It is unclear who controls the center. It changes all the time. It's street to street fighting."
Military analysts believe Gaddafi may focus on quelling the revolt to the west before turning on the east, where the rebel-held city of Misrata, which residents said has been quiet for the past few days, would lie first in their path.
"Gaddafi forces are around the outside the city. They suffered a big defeat in Misrata. But they have heavy weapons," said an insurgent. "We are ready to defend any attack they launch even if we know it's going to be at a heavy price."
Near Bin Jawad some 525 km (330 miles) east of Tripoli, rebels fired rockets out to sea on Thursday after reports that gunboats in the Mediterranean may have bombarded rebel positions on the front line in the oil-producing region.
Rebels on Wednesday took artillery fire on their desert front line outside the oil port of Ras Lanuf, just east of Bin Jawad, and said government forces had hit an oil pipeline leading to Sidrah, about 550 km (340 miles) east of Tripoli. State television blamed "al Qaeda-backed" armed elements.
The Pentagon said it was preparing a "full range" of military options for Libya, including a no-fly zone. Plans were to be discussed by NATO ministers at talks in Brussels on Thursday. Military officers said a zone could be set up quickly.
Rebel forces have appealed to Washington and its allies to impose a no-fly zone to deny Gaddafi's forces the advantage of using warplanes and prevent him moving troops by helicopter.
During fighting in the east, an engineer told Al Jazeera television on Wednesday he had seen air strikes on oil facilities, apparently the first time such a complex was hit. The attack sent a column of black smoke and flames into the sky.
"If requested and if needed we can respond at very short notice. There are a lot of sensitivities in the region as regards what might be considered foreign military interference," NATO Secretary-General Anders Fogh Rasmussen told Sky News.
Italy, whose bases could play a critical role in any military action, has said it will back any decisions taken by NATO, the EU or the United Nations, clearing the way for U.S. naval forces based in Naples to be deployed if needed.
General Raymond Odierno, commander of the U.S. Joint Forces Command, said the U.S. military was probably capable of establishing a "no-fly" zone over Libya "within a couple of days" if the international community so decided.
U.S. Secretary of State Hillary Clinton has made it clear imposing a no-fly zone is a matter for the United Nations and should not be a U.S.-led initiative. Russia and China, permanent members of the U.N. Security Council, oppose the idea, which could entail bombing Libyan air defenses as a first step.
LINE IN THE DESERT
Counter-attacks by Gaddafi loyalists suggest the flamboyant leader, in power for four decades, will not go as quietly or quickly as fellow leaders in Egypt and Tunisia did in a tide of popular unrest rolling across the Arab world.
An upsurge of fighting appears to have cemented a de facto split of the oil-exporting desert state, Africa's fourth biggest, into a government-held western area around Tripoli and an eastern region held by ragged but dedicated rebel forces.
One of Gaddafi's sons has warned of civil war among Libya's tribes if his father steps down.
EU foreign ministers will also meet to discuss North Africa in Brussels on Thursday, focusing on how they can support the process of transition in Egypt and Tunisia, while using sanctions and other means to apply pressure on Gaddafi.
Two members of Libya's opposition council visited the European Parliament on Wednesday and said they wanted EU moral support, political recognition and a no-fly zone shielding the territory they hold -- but not any form of military intervention in a country sensitive about former colonial domination.
RUSSIA CUTS OFF ARMS TO LIBYA
In another move to isolate the Libyan leader diplomatically, Russia will ban all weapons sales to Libya, the Kremlin said in a statement on Thursday, effectively suspending its arms contracts with the government of Gaddafi.
Gaddafi tried to crush the uprising by bombarding Zawiyah and the front lines of the rebel-held east of the country where rebels have set up a headquarters in the second city of Benghazi and where their forces occupy swathes of the country.
A doctor in Zawiyah said many dead lay in the streets, including old people, women and children, with at least 40 killed, probably many more.
The government stuck by its earlier report that its forces had driven rebels from the center and state television said people there were celebrating victory over "terrorist gangs."
Authorities have kept journalists away from Zawiyah.
The counter-offensive by Gaddafi has halted the rebels' advance in the east, where they were forced to withdraw from the front-line town of Bin Jawad after coming under heavy shelling.
"We came into Bin Jawad but gunboats fired on us so we withdrew," one fighter, Adel Yahya, said. Rebel colonel Bashir Abdul Qadr appeared unsure whether naval vessels had been used. "We had bombing from the direction of the sea," he said.
The Libyan government appeared to be putting out feelers toward Western governments that have tried to isolate Gaddafi with financial sanctions and were discussing further measures to try to stop the violence and force him out.
Libyan government emissaries appeared to have flown to Brussels to talk to EU and NATO officials meeting on Thursday and Friday, Italian Foreign Minister Franco Frattini said.
Libya's top oil official said the unrest had cut output to about half a million barrels per day from 1.6 million, but the oil industry was still centrally coordinated.
Brent crude oil rebounded above $116 a barrel, renewing fears global economic recovery could be hit.
Gaddafi has said he will die in Libya rather than flee. But a Libyan-born analyst said Gaddafi's inner circle had approached countries in Africa and Latin America about giving him refuge.
(Additional reporting by Tarek Amar in Tunis, Tom Pfeiffer in Benghazi, Mariam Karouny in Ras Jdir, Mohammed Abbas in Ras Lanuf, Piotr Pilat in Benghazi, Alexander Dziadosz in Ajdabiya, Hamid Ould Ahmed in Algiers, Luke Baker in Brussels, Ross Colvin and Andrew Quinn in Washington and Stefano Ambrogi and William Maclean in London; Writing by Peter Millership and Douglas Hamilton; editing by Mark Heinrich)