With air supremacy and a big advantage in tanks, Gaddafi's forces are keeping up the momentum on the ground.
"The rebel forces, who for weeks, rapidly advancing towards the capital Tripoli, in a bid to oust Gaddafi, are losing steam to the better-armed government forces," al-Jazeera reported from Brega.
Anti-Gaddafi rebels have been pushed out of the northern oil town of Ras Lanuf, reports said. BBC said the government forces now control the town and its oil refinery.
The fall of the town was confirmed by Libya's former interior minister Gen Abdul Fateh Younis, who has defected to the rebels. But he vowed that his fighters would launch a counter-attack latest by tomorrow.
The Arab channel said that Gaddafi's forces were now in a good position to take on Benghazi, Libya's second-largest city and the seat of the rebels' National Opposition Council, which was recognised by France recently.
Columns of Libyan tanks backed by fighters and gunships entered the city of Brega, which was captured by the rebels just a week back after fierce fighting.
Under pressure from the pro-Gaddafi forces, the rebels have repeatedly called on the international community to impose a 'no-fly' zone to stop air strikes on cities, but have been against foreign military intervention on the ground.
The 22-member Arab League at an emergency meeting in Cairo today asked the UN to impose a no-fly zone over Libya.
"The Arab League asks the United Nations to shoulder its responsibility...to impose a no-fly zone over the movement of Libyan military planes and to create safe zones in the places vulnerable to airstrikes," said a League statement released after the emergency session.
The Arab bloc said Libyan leader's government of more than 40 years had "lost its sovereignty."
They also appeared to confer legitimacy on the rebel's interim government, the National Libyan Council, saying they would establish contacts with the group.
Arab League's approval for a 'no-fly' zone is likely to pave the way for the US and its European allies to go ahead with enforcing the zone, which effectively neutralises Gaddafi's air power.
As the sea-saw battle continued in Libya, US President Barack Obama has warned that "the noose" around the Libyan ruler was tightening and said the international community had an obligation to prevent a Rwanda-style civilian massacre in the North African nation.
"Across the board, we are slowly tightening the noose around Gaddafi," Obama said at a White House news conference, which was dominated by the Libyan uprising and the Japanese tsunami tragedy.
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