NATO has said it is investigating reports that at least ten rebels have been killed by a coalition air strike in Libya.

The rebels claim a plane enforcing the no-fly zone hit a rebel convoy on the outskirts of the town of Brega.

A Reuters correspondent at the scene of the air strike saw the burnt out shells of at least four vehicles, including an ambulance, by the side of the road near the eastern entrance to the town.

'Some of Gaddafi's forces sneaked in among the rebels and fired anti-aircraft guns in the air,' said rebel fighter Mustafa Ali Omar. 'After that the NATO forces came and bombed them.'

Rebel fighters at the scene said as many as 14 people may have died in the bombing, which they said happened at around 10pm local time.

Most rebels blamed a government agent for deliberately drawing the friendly fire, but some said other rebels had shot into the air by accident.

'The rebels shot up in the air and the alliance came and bombed them. We are the ones who made the mistake,' said one fighter who did not give his name.

Another, Mohammed Abdallah, said the rebels still needed air strikes to face Gaddafi's better armed forces. Pointing to his assault rifle, he said: 'We cannot fight him with just these.'

Muammar Gaddafi's forces fired rockets on Brega overnight and fighting has continued further west around the town's university early this morning.

Rebels speaking from the western town of Misrata said Gaddafi's forces had intensified their siege of the town with an intense bombardment.

'They used tanks, rocket-propelled grenades, mortar rounds and other projectiles to hit the city,' a spokesman called Sami told Reuters by telephone.

'It was random and very intense bombardment. We no longer recognise the place. The destruction cannot be described.'

Elsewhere, State-controlled Libyan television said Western-led forces bombarded 'civilian and military locations' last night in the towns of Khoms, about 100km east of Tripoli, and Arrujban, about 190km to the southwest.

Calls for ceasefire rejected by government

Meanwhile, Gaddafi's government has rejected rebel conditions for a nationwide ceasefire.

The head of the rebel Transitional National Council Mustafa Abdel Jalil discussed how a truce might be achieved at a meeting with UN special envoy Abdelilah al-Khatibset in Benghazi.

Mr Jalil said: 'We have no objection to a ceasefire, but on condition that Libyans in western cities have full freedom in expressing their views.

'Our main demand is the departure of Muammar Gaddafi and his sons from Libya. This is a demand we will not go back on.'

However, government spokesman Mussa Ibrahim said: 'They are asking us to withdraw from our own cities .... If this is not mad then I don't know what this is. We will not leave our cities.'

But there appears to be confusion over a truce even within rebel ranks.

'We do not agree to the ceasefire. We are defending ourselves and our revolution,' said rebel spokesman Hafiz Ghoga.