Forces loyal to Libyan leader Moammar Gaddafi have bombed the town of Ajdabiya, as government soldiers appear to be advancing deeper into rebel-controlled areas of the country.

Ajdabiya is viewed as the last defense against Benghazi, the unofficial capital of the opposition movement – as such rebels are fiercely committed to defending it.

Gaddafi-backed troops have shelled the town, as the overwhelming military might of the state may have turned the corner in this bloody conflict. However, no casualties have been reported yet.

Gaddafi forces are advancing and it seems that fighting is carrying on and coming close to Benghazi, said an Al Jazeera reporter in Benghazi.

It seems like we are entering the final phase of the conflict but whether this revolution will fail or succeed, that will only be determined in the coming weeks.

The rebel's top commander, former interior minister General Abdel Fatah Younis, said the war in near a crucial phase.

The battle for Ajdabiya is very important for us, he told a news conference in Benghazi on Sunday. We feel that the enemy will have serious logistical problems in supplying their troops.”

Meanwhile, Gaddafi himself has allegedly offered an amnesty to rebel soldiers if they lay down their arms, according to Libyan state television. The offer, if it is genuine, places more pressure on rebel factions who are likely realizing they will lose this war.

There is an enormous degree of anxiety. It's an all or nothing game now, Anita McNaught, a Tripoli-based reporter for Al Jazeera.

If the rebels do not manage to hold out against Gaddafi and establish some kind of protective zone in the east of the country, it is almost certain in the wake of this there would be some dreadful purge of those who dared to raise their hands against the Gaddafi administration. People know that unless they are able to keep Tripoli at bay, that the alternative is almost too awful to contemplate. Those fears apply equally in Tripoli; they are just not expressed as openly as they are in the east.

In the western part of Libya, Gaddafi’s troops have reportedly attacked rebels in Zuwarah.

I can see the tanks from where I am now and they are around 500 meters from the centre of Zuwarah, Tarek Abdullah, a resident, told Reuters.

There are still clashes but I think soon the whole town will fall into their hands.”

Rebel fighters have not given up yet, though. In fact, they claimed they have retaken parts of the key oil port of Brega, which was reportedly in the hands of government forces as recently as this past weekend. Gaddafi forces dispute this contention, insisting they are in control in Brega.