TRIPOLI (Reuters) - Troops loyal to Muammar Gaddafi launched counter-offensives against rebel-held towns on Sunday, increasing fears that Libya is heading for a protracted civil war rather than the swift revolutions seen in Tunisia and Egypt.
The Gaddafi government proclaimed sweeping overnight victories over what it called terrorist bands.
But after what residents said was a day of fierce fighting with artillery, rockets and mortar bombs, rebel forces announced they had fought off Gaddafi's forces in the towns of Zawiyah and Misrata to the immediate west and to the east of Tripoli.
"We would like to put the people of this great nation at ease...because the regime is spreading rumours," opposition rebel council spokesman Hafiz Ghoga told a Benghazi news conference.
"Both Zawya and Misrata are secured, liberated cities."
Gaddafi's troops, backed by tanks, artillery, warplanes and helicopters also attacked positions near the oil port of Ras Lanuf, 660 km (410 miles) east of the capital.
Misrata, with a population of 300,000, is the largest town controlled by rebels outside the rebel-held east of the country.
If rebel soldiers were able to continue their fitful advance westwards, Misrata could be a stepping stone to reaching the capital, Gaddafi's principal stronghold.
Loyalists had poured into the streets of Tripoli at dawn on Sunday firing into the air and holding portraits of the leader who has headed the OPEC oil and gas producer for 41 years.
"These are celebrations because government forces have taken control of all areas to Benghazi and are in the process of taking control of Benghazi," spokesman Mussa Ibrahim said, referring to Libya's second city, situated in the far east.
But the celebrations appeared to be premature as Benghazi remained firmly under rebel control and insurgents at Zawiyah and Misrata said they had repulsed assaults and were now fighting to take back the town of Bin Jawad, west of Ras Lanuf.
Government troops pushed the insurgents out of Bin Jawad which they had captured on Saturday.
But the rebels regrouped around Ras Lanuf and moved back to the outskirts of Bin Jawad, a small, dusty town sandwiched between the coastal highway and the Mediterranean Sea, 160 km (100 miles) east of Gaddafi's hometown of Sirte.
One fighter returning wounded to Ras Lanuf from the government assault on Bin Jawad was asked what he had seen.
"Death," he replied, too distraught to say any more.
Rebels surrounded by troops near the centre of Zawiyah, 50 km (30 miles) west of Tripoli, faced another attack after repelling two assaults by tanks and infantry the day before.
"This morning, there was a new attack, bigger than yesterday. There were one and a half hours of fighting ... Two people were killed from our side and many more injured," spokesman Youssef Shagan said by telephone.
"We are still in full control of the square," he added.
Elite brigades under Gaddafi's son Khamis also launched an assault on Misrata, 200 km (125 miles) east of the capital.
"The brigades tried to reach the centre of the town but revolutionaries managed to repel them. They retreated to the airbase," said a resident who declined to be named.
"The revolutionaries captured 20 soldiers and seized a tank. The town is now fully in the control of the youths," he said.
At least 18 people, including a baby, were killed in the fighting in Misrata on Sunday, a doctor told Reuters by phone.
"We have 18 martyrs but the figure is not final. We also have many people wounded, I cannot even count them," said the doctor, who works at Misrata main hospital, adding that the dead included rebels and civilians.
Rebels first took Bin Jawad on Saturday, but later withdrew. Army units then occupied local homes and set up sniper and rocket-propelled grenade positions for an ambush.
"It's real fierce fighting, like Vietnam," rebel fighter Ali Othman told Reuters. "Every kind of weapon is being used. We've retreated from an ambush and we are going to regroup."
When the rebels returned, a fierce exchange of rockets and mortar bombs ensued just outside Bin Jawad with the army also using heavy artillery. Behind rebel lines, hundreds of fighters armed with machine guns and assault rifles waited to advance.
"The firing is sustained, there is the thud of shells landing, the whoosh of rockets, puffs of smoke and heavy machine gun fire in the distance," a Reuters correspondent there said.
The rebels said they had shot down a helicopter on Sunday and Reuters was shown the wreckage of a warplane on Saturday near Ras Lanuf that rebels said they had brought down.
Doctors at Ras Lanuf hospital said two dead and 22 wounded had arrived from the fighting. A French journalist was shot in the leg, a doctor said, and four rebels were seriously wounded and unlikely to survive.
Britain's Foreign Secretary William Hague said on Sunday that what he called a British diplomatic team that had been captured in the eastern city of Benghazi have now left Libya.
The Sunday Times earlier reported a British Special Air Service (SAS) unit had been captured after a secret diplomatic mission to make contact with opposition leaders backfired.
"They (the rebel army) did capture some British special forces. They could not ascertain if they were friends or foes. For our safety we are holding them and we expect this situation to be resolved soon," a rebel source in Benghazi said.
Western leaders have denounced what they call Gaddafi's brutal response to the uprising, and the International Criminal Court said he and his inner circle face investigation for alleged targeting of civilians by his security forces.
German Foreign Minister Guido Westerwelle said in a newspaper on Sunday that the United Nations security council should launch fresh sanctions against Gaddafi.
"Selective sanctions are necessary against those who are responsible for crimes against the Libyan people," he told the Welt am Sonntag newspaper. "The flow of money must be cut off."
The International Energy Agency said the revolt had blocked about 60 percent of Libya's 1.6 million bpd oil output. The drop, due largely to the flight of thousands of foreign oil workers, will batter the economy and have already jacked up crude prices abroad.
Additional reporting by Michael Georgy in Tripoli, Alexander Dziadosz in Ajdabiya, Mohammed Abbas in Bin Jawad, Stefano Ambrogi in London, Nick Vinocur in Paris and Tom Pfeiffer in Benghazi; Writing by Jon Hemming; Editing by Michael Roddy