ALGIERS (Reuters) - The battle to control Libya has entered its final phase when Muammar Gaddafi must make a choice: to seek a negotiated exit or to defend his capital to the last bullet.
Rebels with support from NATO warplanes have, over the past 48 hours, taken key towns around Gaddafi's stronghold in Tripoli in a dramatic series of advances which cut the city off from supplies of fuel and food.
Rebel offensives have, in the past, turned into headlong retreats. But if they hold their ground, the end of Gaddafi's 41-year rule will be closer than at any time since the conflict began six months ago.
A U.S. official said that for the first time in the conflict, government forces on Sunday fired a Scud missile -- an act that was pointless from a military point of view but signalled the desperation of pro-Gaddafi forces.
"The Libyan regime may or may not collapse forthwith but it now looks like it will happen sooner or later," said Daniel Korski, a fellow at the European Council for Foreign Relations.
He added: "The manner of its collapse, however, and the method of the rebel takeover will be just as important as the conduct of the war."
Flushed by their success in getting so close to Tripoli, some rank-and-file rebels on Monday spoke of attacking the capital next. But analysts said that will not be the favoured option for rebel commanders.
Gaddafi will throw all the men and weapons he has left into a defence of the capital, civilian casualties in urban fighting will be high, and sections of the population in Tripoli are likely to oppose the rebels.
Even if Gaddafi's opponents were able to win that fight, the bloodshed would create grievances and vendettas which could make the capital -- and maybe even the country -- ungovernable.
"Any fight for Tripoli can be expected to be extremely bloody," said David Hartwell, North Africa and Middle East analyst at IHS Jane's, a defence and security consultancy,
"My guess is the strategy is to isolate the capital and start applying pressure ... They (the rebels) seem to be trying to cut the links to the capital, one assumes with the aim of not having to assault the capital."
But will that approach work? Encircling Tripoli and cutting off supplies could produce any one of three outcomes, or a combination of the three.
Starved of fuel and unable to bring in more weapons and reinforcements, elements of Gaddafi's security forces in Tripoli may decide the best way to save themselves is to lay down their arms or cross over and join the rebels.
Fractures in Gaddafi's security apparatus could be the signal for the second outcome: Gaddafi's underground opponents launch an uprising from within the city.
Representatives of the clandestine opposition have told Reuters they are waiting for the right moment to begin a revolt. Some of them have weapons.
It will take time though before Tripoli is ripe for an uprising, said Shashank Joshi, an analyst with the Royal United Services Institute in London.
"It is not on the edge of a cusp of falling and it's entirely possible that many people in Tripoli are not really aware of what has happened at Zawiyah. So it may not yet bring us to the tipping point."
The third possibility is that Gaddafi will decide to negotiate an exit deal. That would possibly involve him and his family going into exile in a state which will not hand him over for prosecution to the International Criminal Court.
People who know him say Gaddafi -- beneath his eccentric image -- is a pragmatist who will cut a deal if that is what it takes to save the lives of his family.
But they also say this will not happen until he is convinced he can no longer win. His spokesman on Sunday denied there were any negotiations on Gaddafi's departure.
"If he is going to try to strike a deal he will leave it until the last minute," said Hartwell of IHS Janes. "He still thinks he has something to fight for."
The worst case scenario for the rebels and their Western backers is that the strategy of strangling Gaddafi's capital will not dislodge him. In this event, there will be a battle for Tripoli and the only thing certain then is that there will be huge loss of life.
"It would not be surprising if Gaddafi were to go out with all guns blazing so long as no deal is on the table and he does not have an exit strategy," said Anthony Skinner, an analyst with risk advisory firm Maplecroft.
"The colonel may booby trap Tripoli and loyalists may also put up a fight to the death."
Additional reporting by Peter Apps in London and David Brunnstrom in Brussels; ; Editing by Giles Elgood