By Mariam Karouny
TUNIS (Reuters) - Forces loyal to Muammar Gaddafi attacked the small town of Zuwarah on Monday, seeking to recapture one of the last remaining rebel holdouts in western Libya, residents said.
"They are coming from the eastern side and also trying to get in from the west and the south. They are one kilometer from the center of town," resident Tarek Abdallah told Reuters by telephone.
"They are firing artillery shells. The shops are closed, people are terrified. There is no life in Zuwarah right now."
Zuwarah is a Mediterranean coastal town of 40,000 people, mostly from the Amazigh Berber minority, some 120 km (70 miles) west of the capital Tripoli and near the border with Tunisia.
"I do not think we will hold on for long because there aren't that many of us, but the rebels went to try to defend the town anyway," Abdallah said.
Another resident, Waleed, said: "We are hiding in our houses, we are very scared. How can they do something like that to us? We are Libyans like them."
One rebel fighter was killed and many wounded, insurgent Abu Zeid said. "They came in military vehicles and started shooting at us," he said. "We do not have weapons, we are fighting with whatever we can find here. God knows what will happen to us."
There were reports of fighting in Zuwarah at the start of the insurrection against Gaddafi's four-decade rule last month but since then there had been no news from the town.
Gaddafi's forces initially lost control over large swathes of the oil exporting North African country, but over the past week, military momentum has shifted back in their favor.
His forces have stamped out a rebellion in Zawiyah, 50 km (30 miles) west of Tripoli and pushed insurgents in the east back from the oil towns of Ras Lanuf and Brega.
The only major city held by insurgents in the west is Misrata, 200 km (130 miles) east of the capital.
Rebels and residents there have reported that an assault on the city had been held up by a mutiny within the ranks of the besieging government forces.
"The fighting has stopped now. Early on Monday we heard five shells after a fierce night of fighting and now it has stopped," Mohammed, a resident of Misrata, told Reuters by telephone.
"We are not sure why it has stopped. Maybe they got tired or maybe one group won over the other. Things are not clear."
The government has denied the reports, which could not be verified independently because Libyan authorities have not allowed reporters access to the city.
(Writing by Silvia Aloisi; editing by Mark Heinrich)