"The rebels, tightening their grip on Libya after a military blitz, also demanded that Algeria return Gadhafi's wife and three of his children who fled there Monday. Granting asylum to his family, including daughter Aisha, who gave birth in Algeria on Tuesday, was an "enemy act," said Ahmed al-Darrad, the rebels' interior minister.
Rebel leaders insisted they are slowly restoring order in the war-scarred capital of Tripoli after a week of fighting, including deploying police and collecting garbage. Reporters touring Tripoli still saw chaotic scenes, including desperate motorists stealing fuel from a gas station.
In the capital's Souk al Jumma neighborhood, about 200 people pounded on the doors of a bank, demanding that it open. Civil servants said they were told they would receive a nearly $200 advance on their salaries for the three-day Muslim holiday of Eid al-Fitr, which starts today in Libya.
Rebel fighters were converging on the heavily militarized town of Sirte, some 250 miles east of Tripoli.
The rebels gave pro-Gadhafi forces there a deadline of Saturday -- the day after the end of the Muslim holiday -- to complete negotiations and surrender. After that, the rebels will "act decisively and militarily," said Mustafa Abdul-Jalil, the head of the rebels' National Transitional Council.
His deputy, Ali Tarhouni, said in Tripoli that "sometimes to avoid bloodshed you must shed blood, and the faster we do this, the less blood we will shed."
There has been speculation that Gadhafi is seeking refuge in Sirte or one of the other remaining regime strongholds, among them the towns of Bani Walid or Sabha.
"Gadhafi is now fleeing -- and we have a good idea where he is," Tarhouni said, without elaborating. "We don't have any doubt that we will catch him."
Some 90 miles west of Sirte, about a dozen armored, gun-mounted trucks were parked at a staging ground in the desert. A highway overpass provided some shade for rebels, most dressed in T-shirts and camouflage pants.
Commander Ismail Shallouf said patrols have gone 30 miles closer to Sirte, and occasionally have exchanged fire with Gadhafi fighters. Ahmed Abu Sweira, standing on the overpass, said rebels are waiting for reinforcements for the final push.
On Monday, NATO hit about three dozen Gadhafi military targets in the Sirte area. NATO insists it remains within the bounds of its original mission of protecting Libyan civilians, but appears to be paving the way for advancing rebel forces with its targeted airstrikes.
Diplomatic tensions rose between the rebels and Algeria after the Algerian government agreed to grant refuge to Gadhafi's wife, Safiya, daughter Aisha and sons Hannibal and Mohammed.
The fate of Gadhafi's son Khamis continues to be in doubt. On Monday, rebel fighters said they believed Khamis, commander of an elite military unit, was killed in a rebel ambush south of Tripoli last week. However, Tarhouni said Tuesday that he cannot confirm Khamis' death.
As the last vestiges of Gadhafi's regime disappear, the rebels are trying to set up a new government in Tripoli. A new Cabinet has begun meeting, although not all members are present. Leaders of the interim government, Abdul-Jalil and Mahmoud Jibril, are holding meetings abroad and have not yet arrived in the capital.
The new government also is struggling with a water shortage in the city of nearly 2 million people. They have been without running water for a week since Gadhafi loyalists attacked crews trying to restart pumping stations for aquifers deep in the desert, rebel official Aref Ali Nayeb said. Bottles of drinking water are reaching most of the residents in aid shipments via Tripoli's port, distributed through neighborhood councils and mosques.