A spokesman for Tripoli's new military council says the ousted dictator has been tracked down and is now trapped in a 40 mile radius area.
The council's deputy defense minister said, however, that Libya's former rebels had no idea where Gadhafi was, and they were focusing on taking control of territory and "liberating all of Libya" instead of tracking down the former leader.
The spokesman adds that the rebels are now preparing to either detain or kill Gadhafi. Getting Gadhafi would help seal the new rulers' hold on the country.
Figures in Libya's new government have given a series of conflicting statements about Gadhafi's presumed whereabouts since the fall of the capital last month and many reports about his location have proven untrue.
Meanwhile NATO said that it had made a number of airstrikes around Sirte, Gadhafi's hometown, on Tuesday. They also targeted the Gadhafi loyalist strongholds of Hun, Sabha and Waddan.
The Associated Press contributed to this story.