International pressure on Libyan leader Muammar Gaddafi to end a crackdown on his opponents escalated as his loyalists fought rebels holding the two cities closest to the capital and his war planes bombed an ammunition depot in the east.
The US moved naval and air forces closer to Libya and said all options were open, including patrols of the North African nation's skies to protect its citizens from their ruler.
France said it would fly aid to the opposition-controlled eastern half of the country, the European Union imposed an arms embargo and other sanctions, following the lead of the US and the United Nations. The EU was also considering the creation of a no-fly zone over Libya and the US and Europe were freezing billions in Libya's foreign assets.
"Gaddafi has lost the legitimacy to govern and it is time for him to go without further violence or delay," US secretary of state Hillary Clinton said. "No option is off the table. That of course includes a no-fly zone."
And Prime Minister David Cameron said: "We do not in any way rule out the use of military assets.".
Gaddafi, who in the past two weeks has launched the most brutal crackdown of any Arab regime facing a wave of popular uprisings, laughed off a question from ABC News about whether he would step down. "My people love me. They would die for me," he said. ABC reported that Gaddafi invited the United Nations or any other organisation to Libya on a fact-finding mission.
Gaddafi's remarks were met with derision in Washington. "It sounds, just frankly, delusional," said US ambassador to the UN Susan Rice.
She said Gaddafi's behaviour, including laughing on camera in TV interviews amid the chaos, "underscores how unfit he is to lead and how disconnected he is from reality".
The turmoil in the oil-rich nation rocked markets for another day. Libya's oil chief said production had been cut by around 50%, denting supplies that go primarily to Europe. The country provides 2% of the world's oil, but concerns the unrest will spread to other oil-rich nations has sent oil prices rising worldwide.
Meanwhile there were signs of economic distress in the country, with prices skyrocketing and long lines forming for bread and petrol.