Outraged Western governments scrambled to craft a collective response to the crisis in the oil-rich North African state, including possible sanctions against Kadhafi's remaining loyalists and a freeze on assets they are believed to have salted away abroad.

But governments were constrained by fears of reprisals against nationals still stranded amid what escaping expatriates described as hellish scenes as evacuation efforts dragged on on the 11th day of the crisis.

In Az-Zawiyah, west of Tripoli, 23 people were killed and 44 wounded on Thursday when regime loyalists mounted a ferocious rearguard action against protesters in the key oil refinery town, Libya's Quryna paper reported.

"The wounded cannot reach the hospitals because of shots being fired in all directions," said the paper, based in now the opposition-held eastern city of Benghazi quoting its correspondent in Az-Zawiyah.

Heavy fighting was also reported in Libya's third city Misrata, to the west of capital.

In Zouara, further west towards the Tunisian border, fleeing Egyptian workers said the town was in the control of civilian militias after fierce fighting on Wednesday evening.

Addressing his divided nation on Thursday for the second time in three days, Kadhafi, 68, accused residents of the town of siding with Al-Qaeda leader Osama bin Laden.

"You in Zawiyah turn to Bin Laden," he said. "They give you drugs.

"It is obvious now that this issue is run by Al-Qaeda," he said, addressing the town's elders. "Those armed youngsters, our children, are incited by people who are wanted by America and the Western world.

"They have guns, they feel trigger happy and they shoot especially when they are stoned with drugs."

In marked contrast to a 75-minute address from a podium outside his Tripoli home on Tuesday, Kadhafi spoke by telephone from an undisclosed location in an intervention that lasted barely 20 minutes.

His decision to speak by telephone rather than make an on-screen appearance has raised questions about his whereabouts, and indicates that his power base may be shrinking.

In Tripoli, the streets have been largely deserted in recent days but worshippers were expected to turn out at the mosques for the main weekly prayers on Friday, the Muslim day of rest and also a traditional day of protest.

Libya's second city of Benghazi, where the unprecedented protests against Kadhafi's four decade rule first erupted, was firmly in the hands of Kadhafi's opponents, an AFP correspondent said.

Effigies apparently of Kadhafi hung from street lamps in the eastern city and children played on top of an abandoned tank. Police stations had been gutted by fire but residents said there had been no looting.

In the courthouse outside which the demonstrations started, regime opponents set up a revolutionary headquarters to take over the administration of the city as civilian militiamen and mutinous regular army troops patrolled the streets.

Some soldiers were selling their weapons to the highest bidder even as their defecting commanders strove to forge their men into an organised anti-Kadhafi force.

Leading an international outcry over a Libyan death toll now put at as high as 1,000, US President Barack Obama consulted the leaders of Britain, France and Italy on how to "immediately" respond to Kadhafi's brutal crackdown.

Tens of thousands of foreigners are clamouring to flee the chaos in Libya as foreign governments lay on a mammoth evacuation operation, and the crisis has driven oil prices to two-year highs in a new threat to the global economy.

US officials said no option had been ruled out. Possible measures include an asset freeze for regime figures, travel and visa bans, investment and export restrictions or tough action at the UN Security Council.

But State Department spokesman Philip Crowley also stressed the extreme sensitivity of the situation.

"Whatever steps that we do take, we want them to be effective. And we certainly don't want to take any actions that put either our citizens or the citizens of other countries at risk," he said.

Western governments faced mounting domestic criticism for their failure to organise an evacuation operation more speedily as oil workers stranded in remote camps in Libya's vast desert spoke of their equipment and supplies being looted amid growing lawlessness.

British Prime Minister David Cameron said he was "incredibly sorry" for the delays in getting British nationals home, as the first three planes made it out, carrying adults, children and even a dog.

Russian Prime Minister Vladimir Putin warned that volatility in international oil markets as a result of the instability in Libya posed a "serious threat to the world". London oil prices inched close to $120 on Thursday, a level not seen since mid-2008.

But crude futures retreated in Friday's Asian trade, with London Brent down to just under $111 a barrel, after Saudi Arabia reassured oil consumers it would boost production to make up for any production lost in Libya.

Venezuela, one of Kadhafi's few remaining allies, accused Western powers of plotting an invasion to grab Libyan oil. "Long live Libya and its independence!" President Hugo Chavez declared on Twitter.

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