Forces loyal to Libyan leader Muammar Gaddafi have launched a fierce counter-attack against the anti-government protests.

There are reports of running gun battles with rebels who have threatened the Libyan leader by seizing important towns close to the capital Tripoli.

Forces loyal to the Libyan leader attacked anti-government militias controlling Misrata, Libya's third-biggest city, 200km east of Tripoli, and several people were killed in fighting near the city's airport.

Soldiers have been reported along the roads approaching Tripoli. In Zawiyah, witnesses said pro- and anti-Gaddafi forces were firing at each other in the streets.

A Libyan newspaper is reporting that the gun battles in Zawiyah, an oil terminal 50km from the capital, have left ten people dead.

The opposition is already in control of major centres in the east, including the second city of Benghazi.

France's top human rights official said up to 2,000 people might have died so far in the uprising.

In a rambling appeal for calm this afternoon, Colonel Gaddafi blamed the revolt on Osama bin Laden and said the protestors were fuelled by milk and Nescafé spiked with hallucinogenic drugs.

Col Gaddafi, who just two days ago vowed in a televised address to crush the revolt and fight to the last, showed none of the fist-thumping rage of that speech.

This time, he spoke to state television by telephone without appearing in person, and his tone seemed more conciliatory.

'Their ages are 17. They give them pills at night, they put hallucinatory pills in their drinks, their milk, their coffee, their Nescafé,' he said.

The unrest has driven world oil prices up to around $120 a barrel, creating concern about the economic recovery.

Earlier, oil sank from 2-1/2-year highs near $120 a barrel in strong, late-day profit-taking following an unsubstantiated rumour Muammar Gaddafi had been shot and Saudi Arabia's assurances it can counter Libyan supply disruptions.

Key Libyan oil and product terminals to the east of the capital are in the hands of rebels, according to Benghazi residents in touch with people in region.

US President Barack Obama will discuss the crisis with French President Nicolas Sarkozy and British Prime Minister David Cameron later tonight.

40 Irish citizens remain in Libya

The Government jet has left Dublin and is enroute to Rome to pick up the Irish Ambassador there and the Irish emergency team, which will coordinate efforts in Libya to fly home the remaining Irish citizens.

The flight will continue to Valetta tonight and then on to Tripoli as soon as possible. There are about 40 Irish people still in Libya.

Some will be flown out by pooled European aircraft tonight and some will leave Benghazi by sea.

It is understood that difficulties in arranging ships to leave Benghazi have been resolved with the port authorities.

In the case of the other Irish, the Department of Foreign Affairs says it is keeping a range of options open, including the use of Air Corps planes, a private charter and other EU flights.

The Department said those who remain in Libya are safe, but said there are extreme problems at Tripoli airport that have to be overcome.

Separately, an Irish air corps flight left Tripoli this evening with a medical emergency evacuacee on board.

The evacuee is a European national and the Irish Government was asked if its Lear jet could be used because it was small and had a medical emergency team with it.