Moammar Gadhafi's control of Libya was being whittled away one town and village at a time Wednesday, as opposition protests spread ever closer to the capital of Tripoli where the longtime dictator was holed up with a force of loyal militiamen.

The rebellion against his more than 40-year rule has taken almost complete control of the eastern half of the country and the opposition has vowed to "liberate" Tripoli, where Gadhafi loyalists and mercenaries were reportedly roaming the streets shooting civilians at random and tanks were deployed around the outskirts.

But in Benghazi, Canadian-Libyan citizen Jalal El-Abbar said residents were celebrating their liberation from Gadhafi.

El-Abbar said the protesters are in control of Benghazi and are organizing basic services for residents. "It's still not the whole victory, but we're working on it," El-Abbar told CTV News Channel by telephone from Benghazi.

In a further sign of Gadhafi's faltering hold on power, two Libyan air force pilots parachuted out of their fighter-bomber and let it crash into the eastern Libyan desert rather than follow orders to bomb an opposition-held city.

Calls were building for the international community to take action to punish Gadhafi's regime for the bloody crackdown it has unleashed against the uprising that began Feb. 15.

U.S. President Barack Obama said the bloodshed in Libya is "outrageous and it is unacceptable," and directed his administration to prepare a full range of options, including possible sanctions that could freeze assets of Libyan officials and ban them from travelling to the U.S.

French President Nicolas Sarkozy raised the possibility of the European Union cutting off economic ties and the United Nations was being pressed to declare a no-fly zone over Libya to prevent Gadhafi's forces from using warplanes to hit protesters.

Rebellion grows

Farag al-Warfali, a banker in Benghazi, said the young men who were the backbone of the anti-Gadhafi protest have registered to obtain weapons, which had been looted from police stations and military bases and then turned over to the city's new rulers.

He said the plan was to "take their weapons and march toward Tripoli," although Benghazi lies 940 kilometres east of the capital.

There were similar calls in Misrata, the closest major city to the capital to fall to anti-government forces, where residents were invited to come to "jihad" in support of the anti-Gadhafi camp, said one resident, Iman.

"We are going to join forces with our brothers in Tripoli," she said.

Gadhafi militiamen battled anti-government forces late Tuesday in Sabratha, a town west of Tripoli famed for nearby ancient Roman ruins, which the protesters had taken over.

The opposition also claimed to have taken Misrata, Libya's third-largest city.

Residents honked horns in celebration and raised the pre-Gadhafi flags of the Libyan monarchy after several days of fighting that drove militiamen from the city, about 200 kilometres east of Tripoli, said Faraj al-Misrati, a local doctor. He said six people had been killed and 200 wounded in clashes that began Feb. 18.

Residents had formed committees to clean the streets, protect the city and treat the wounded, he said. "The solidarity among the people here is amazing, even the disabled are helping out."

New videos posted by Libya's opposition on Facebook also showed scores of anti-government protesters raising the pre-Gadhafi flag on a building in Zawiya, 50 kilometres west of Tripoli. The city is located near a key oil port and refineries on the Mediterranean. The footage couldn't be independently confirmed.

Government opponents were also in control in Zwara, a town about 50 kilometres from the Tunisian border in the west, after local army units sided with them and police fled, said one resident, a 25-year-old unemployed university graduate.

"This man (Gadhafi) has reached the point that he's saying he will bring armies from Africa. That means he is isolated," he said.

Gunmen roam Tripoli

By nightfall Wednesday, Gadhafi's control over the country he ruled erratically but brutally for four decades had been reduced to the western coastal region around Tripoli, the deserts to the south and parts of the centre.

In Tripoli, Gadhafi's stronghold, protest organizers called for new rallies Thursday and Friday, raising the potential for more bloodshed.

Militiamen and Gadhafi supporters -- a mix of Libyans and foreign African fighters brought in by bus or air -- roamed the capital's main streets after the Libyan leader gave a fist-pounding televised speech in which he vowed to fight to the death.

The gunmen fired weapons in the air, chanting "Long live Gadhafi," and waved green flags.

With a steady rain, streets were largely empty, residents said, but in many neighbourhoods people set up watch groups to keep the militiamen out by barricading their streets with concrete blocks, metal and rocks, and searching those trying to enter.

Gadhafi's residence at Tripoli's Aziziya Gates was guarded by a line of armed militiamen in vehicles, some masked, residents told the Associated Press. The radio station building downtown was also heavily fortified.

"Mercenaries are everywhere with weapons. You can't open a window or door. Snipers hunt people," said one woman, who spent the night in her home awake hearing gunfire outside. "We are under siege, at the mercy of a man who is not a Muslim."

But the protesters were organizing despite the shows of force, said one activist in Tripoli. At night, they fan out and spray-paint anti-Gadhafi graffiti or set fires near police stations, chanting: "The people want the ouster of the regime!"

Tripoli airport

CTV Middle East Bureau Chief Martin Seemungal said the Tripoli airport has become jammed with foreigners trying to flee the country.

"An Italian businessperson who was working in Libya, who just got out late last night essentially said it's a nightmare at the airport, it took him six hours to go from the parking lot to the check-in counter," Seemungal said.

"So, it's an immense scramble and some countries are sending planes in, but it's a real tense situation at the airport with everyone trying to get out."

The U.S. planned to evacuate American citizens using a ferry that was due to depart for Malta on Wednesday. Britain sent two warships to the Libyan coast in advance of a possible sea-side evacuation of U.K. citizens.

Turkey evacuated 3,000 of its citizens Wednesday, using a pair of commercial ships that left the Libyan port of Benghazi with a naval escort.

The anti-Gadhafi forces and the army units that have joined them were consolidating their hold on nearly the entire eastern half of the 1,500-kilometre Mediterranean coastline, stretching from the Egyptian border to Ajdabiya, about 800 kilometres east of Tripoli, encroaching on key oil fields around the Gulf of Sidra.

Across their territory, they have been setting up their own administrations. In many places, committees organized by residents, tribes and mutinous army officers were governing, often collecting weapons looted from pro-Gadhafi troops to prevent chaos.

"There is now an operating room for the militaries of all the liberated cities and they are trying to convince the others to join them," said Lt. Col. Omar Hamza, an army officer who had joined the rebels in Tobruk. "They are trying to help the people in Tripoli to capture Gadhafi."

At the Egyptian border, guards fled and local tribal elders have formed committees to take their place. "Welcome to the new Libya," proclaimed graffiti spray-painted at the crossing.

With files from The Associated Press and The Canadian Press