Libyan revolutionary forces have captured almost all of Bani Walid, one of Muammar Gaddafi's last remaining strongholds, but still face pockets of resistance as they try to end a weeks-long stand-off, officials said.
Fierce resistance in Bani Walid and Gaddafi's hometown of Sirte has prevented Libya's new leaders from declaring full victory and setting a timeline for elections.
It has been more than two months since the former rebels gained control of the rest of the oil-rich North African nation.
In a step toward normalcy, the transitional leadership council confirmed it has signed an agreement with Nato that partially lifts the no-fly zone imposed in March over the country, allowing resumption of some flights without seeking Nato approval.
The embargo was imposed as part of the UN Security Council resolution that authorised airstrikes to protect civilians from Gaddafi's regime.
Anwar Elfeitori, the minister of transportation and communications, said the agreement signed in Malta will make it easier to transport wounded fighters from the front lines for treatment.
"The partial lifting of the air embargo will help with the transportation of the casualties, which is the number one priority at this time, as well as facilitate the movement of people between Libya and the rest of the world," Mr Elfeitori said.
He said the agreement only applies to specific routes and altitudes for humanitarian flights but is designed so it can be amended to include other areas as security conditions allow.