Monday, thousands of the rebels waited on orders to launch an attack on Bani Walid, a town southeast of Tripoli. The developments followed a breakdown in negotiations over the town's surrender.
The talks broke down, in part, because the loyalists insisted the rebels disarm before entering the town.
Gadhafi and several of his sons were in Bani Walid just a few days ago. Rebels believe he has now fled further south.
Rebel forces control most of Libya and are already setting up a new government. However they cannot declare total victory until Gadhafi is caught and areas like Bani Walid are subdued.
The rebels have extended to Saturday a deadline for the surrender of Gadhafi's hometown of Sirte and other loyalist areas. Rebel negotiator Abdullah Kanshil said Monday that "there are no negotiations." He added that rebels were talking to individual families in the town about urgent needs for water and food.
Loyalists though still hold a few towns, including Sirte, Gadhafi's hometown.
NATO, meanwhile, reported bombing several targets near Sirte and other areas overnight.
NATO has been bombing Gadhafi's forces since March under a United Nations mandate to protect Libyan civilians. But that mandate expires Sept. 27, and the rebels may be eager to end the fight before it runs out- since it may be politically difficult to get it renewed.
The Associated Press contributed to this story.
