Libyan militias operating alongside the defence ministry readied their forces to advance on a town that remains a bastion of support for the ousted regime of Muammar Gaddafi, stoking fears of an impending battle that has already sent dozens of families fleeing.
Bani Walid is one of the last major pockets of support for the former regime, and disarming its militants is one of the most daunting tasks facing the government.
Militias in the town of about 100,000 people are heavily armed with rocket-propelled grenades, automatic weapons and artillery left over from last year's eight-month civil war.
During the war, many blamed the town's fighters for the worst of the sniper attacks, shelling, rape and other violence during the bloody siege of the coastal city of Misrata.
Calls for revenge again peaked after the death last week of a well-known 22-year-old former rebel fighter after ill treatment at the hands of militiamen from Bani Walid.
Omran Shaaban had been hailed as the first fighter to find Gaddafi hiding in a drainage ditch last October, leading to the dictator's capture and killing. Seen as a hero to many, Mr Shaaban's death raised the prospect of more score-settling.
The same day of his death, the newly elected National Congress authorised the police and army to use force if necessary to apprehend those who abducted Mr Shaaban and three of his companions in July near Bani Walid.
The government had brokered Mr Shaaban's release and he was transferred to a hospital in France where he died of his wounds. He had been paralysed from the waist down and relatives say his chest had been slashed with razors during his 55 days in captivity.
At least four residents of Misrata are still being held by the town's militias, according to local activists. Militia commander Faraj al-Swehli said dozens of families have fled Bani Walid in anticipation of an offensive.
The government has given Bani Walid's leaders until this coming Friday to handover suspects linked to the torture of Mr Shaaban.