In a further sign of Gadhafi's faltering hold, two air force pilots - one from the leader's own tribe - parachuted out of their warplane and let it crash into the eastern Libyan desert rather than follow orders to bomb an opposition-held city.
International momentum was building for action to punish Gadhafi's regime for the bloody crackdown it has unleashed against the uprising that began Feb. 15.
President Barack Obama said the suffering and bloodshed in Libya "is outrageous and it is unacceptable," and he directed his administration to prepare a full range of options, including possible sanctions that could freeze the assets and ban travel to the U.S. by Libyan officials.
French President Nicolas Sarkozy raised the possibility of the European Union cutting off economic ties.
Another proposal gaining some traction was for the United Nations to declare a no-fly zone over Libya to prevent it using warplanes to hit protesters. U.N. High Commissioner for Human Rights Navi Pillay said that if reports of such strikes are confirmed, "there's an immediate need for that level of protection."
Italy's Foreign Minister Franco Frattini said estimates of some 1,000 people killed in the violence in Libya were "credible," although he stressed information about casualties was incomplete.
The New York-based Human Rights Watch has put the death toll at nearly 300, according to a partial count.
In Tripoli, Gadhafi's stronghold, protest organizers called for new rallies Thursday and Friday, raising the potential for a more bloody confrontation.
Militiamen and Gadhafi supporters - a mix of Libyans and foreign African fighters bused in - roamed the capital's main streets, called up Tuesday night by the Libyan leader in a fist-pounding speech in which he vowed to fight to the death. The gunmen fired weapons in the air, chanting "Long live Gadhafi," and waved green flags. With a steady rain, streets were largely empty, residents said.
In many neighborhoods, residents set up watch groups to keep militiamen out, barricading streets with concrete blocks, metal and rocks, and searching those trying to enter, a Tripoli activist said.
Gadhafi's residence at Tripoli's Aziziya Gates was guarded by loyalists along with a line of armed militiamen in vehicles, some masked, he said. The radio station building downtown was also heavily fortified. In one western neighborhood, security forces stormed several homes and arrested three or four people, a witness said, while tanks were deployed on the eastern outskirts, witnesses in at least one neighborhood said.
"Mercenaries are everywhere with weapons. You can't open a window or door. Snipers hunt people," said another resident, who said she had spent the night in her home awake hearing gunfire outside. "We are under siege, at the mercy of a man who is not a Muslim."
But below the surface, protesters were organizing, said the activist. At night, they fan out and spray-paint anti-Gadhafi graffiti or set fires near police stations, chanting, "The people want the ouster of the regime," before running at the approach of militiamen, he said. The Tripoli residents, like other witnesses around the country, spoke on condition of anonymity because of fear of retaliation.
In opposition-controlled Benghazi, the eastern city where the uprising began, residents held a mass rally outside the city's main courthouse, vowing to support protests in the capital, said Farag al-Warfali, a banker. They also called a one-day fast in solidarity with them. Afterward, young men went into the courthouse to register to obtain weapons, which had been looted from police stations and military bases and then turned over to the city's new rulers, he said.
The idea is to "take their weapons and march toward Tripoli," al-Warfali said, although Benghazi lies 580 miles (940 kilometers) east of the capital, and territory still loyal to Gadhafi lies between them.
There were similar calls in Misrata - several hours' drive from Tripoli, the closest major city to the capital to fall to anti-government forces. A mosque called residents to come to "jihad," or holy war, in support of the anti-Gadhafi camp, said one resident, Iman.
"We are going to join forces with our brothers in Tripoli," she said.
The extent of Gadhafi's control over the country he has ruled for 41 years had been reduced to the western coastal region around Tripoli, the deserts to the south and parts of the center.
After Gadhafi's speech Tuesday night, militiamen flooded into Sabratha, a town west of Tripoli famed for nearby ancient Roman ruins, and battled government opponents who had taken over, said one resident. Around 5,000 militiamen from neighboring towns, backed by army and police units, clashed with the rival group and drove them from the streets, he said.
But his territory was being eroded.
The opposition said Wednesday it had taken over Misrata, Libya's third-largest city.
Residents honked horns in celebration and raised the pre-Gadhafi flags of the Libyan monarchy after several days of fighting that drove militiamen from the city, about 120 miles (200 kilometers) east of Tripoli, said Faraj al-Misrati, a local doctor. He said six people had been killed and 200 wounded in clashes that began Feb. 18.
Residents had formed committees to clean the streets, protect the city and treat the wounded, he said. "The solidarity among the people here is amazing, even the disabled are helping out."
An audio statement posted on the Internet reportedly from armed forces officers in Misrata proclaimed "our total support" for the anti-Gadhafi movement.
New videos posted by Libya's opposition on Facebook also showed scores of anti-government protesters raising the pre-Gadhafi flag on a building in Zawiya, 30 miles (50 kilometers) west of Tripoli.
The city is located near a key oil port and refineries on the Mediterranean. The footage couldn't be independently confirmed.
Government opponents were also in control in Zwara, a town about 30 miles (50 kilometers) from the Tunisian border in the west, after local army units sided with them and police fled, said one resident, a 25-year-old unemployed university graduate. "This man (Gadhafi) has reached the point that he's saying he will bring armies from Africa. That means he is isolated," he said.
Gadhafi long kept his army weak and divided for fear of challenge, so in the fierce crackdown his regime has waged on the uprising, he has relied on militia groups, beefed up by fighters hired abroad. Meanwhile, army units in many places have sided with the rebellion.
On Wednesday, two air force pilots jumped from parachutes from their Russian-made Sukhoi fighter jet and let it crash, rather than carry out orders to bomb opposition-held Benghazi, Libya's second-largest city, the website Qureyna reported, citing an unidentified officer in the air force control room.
One of the pilots - identified by the report as Ali Omar Gadhafi - was from Gadhafi's tribe, the Gadhadhfa, said Farag al-Maghrabi, who saw the pilots and the wreckage of the jet, which crashed in the desert outside the key oil port of Breqa, about 440 miles (710 kilometers) east of Tripoli.
The anti-Gadhafi forces and the mutinous army units that have joined them were consolidating their hold on nearly the entire eastern half of the 1,000-mile Mediterranean coastline, stretching from the Egyptian border to Ajdabiya, about 480 miles (800 kilometers) east of Tripoli, encroaching on key oil fields around the Gulf of Sidra.
Across their territory, they have been setting up their own administrations. In many places, committees organized by residents, tribes and mutinous army officers were governing, often collecting weapons looted from pro-Gadhafi troops to prevent chaos.
"There is now an operating room for the militaries of all the liberated cities and they are trying to convince the others to join them," said Lt. Col. Omar Hamza, an army officer who had allied with the rebels in Tobruk. "They are trying to help the people in Tripoli to capture Gadhafi."
At the Egyptian border, guards had fled, and local tribal elders have formed local committees to take their place. "Welcome to the new Libya," proclaimed graffiti spray-painted at the crossing.
Fawzy Ignashy, a former soldier now in civilian clothes at the border, said that early in the uprising, some commanders ordered troops to fire on protesters, but tribal leaders stepped in and ordered them to stop.
"They did because they were from here. So the officers fled," he said.
A defense committee of residents was even guarding one of Gadhafi's once highly secretive anti-aircraft missile bases outside Tobruk. "This is the first time I've seen missiles like these up close," said Abdelsalam al-Gedani, one of the guards, dressed in an overcoat and carrying a Kalashnikov rifle.
International alarm has risen over the crisis, and is sending oil prices soaring and European and other countries scrambling to get their citizens out of Libya. Oil prices hit $100 per barrel for the first time since 2008. Libya is the world's 15th largest exporter of crude, accounting for 2 percent of global daily output.
Traders are worried the revolt could threaten Libya's oil production and spread to other countries in the region.
Passengers arriving in Malta, a short flight away from Libya, described chaos and violence at Tripoli's airport, with desperate people pushing and shoving to get onto the few flights taking off Wednesday.
"One of my fellow passengers was actually beaten up quite heavily and kicked on," said Steffan Arnersten, a 42-year-old Swede who works as a managing director at a technical consulting company.
The U.N. Security Council held an emergency meeting that ended with a statement condemning the crackdown, expressing "grave concern" and calling for an "immediate end to the violence" and steps to address the legitimate demands of the Libyan people.
After a meeting of EU ambassadors, the bloc did not announce sanctions, but EU foreign policy chief Catherine Ashton said the EU stood "ready to take further measures" beyond suspending talks on a bilateral deal.
The precise measures were still being negotiated, a senior EU official said, adding that there were up to 10,000 EU citizens in Libya, sparking worries about getting them out of the North African country safely. The official requested anonymity because of the sensitivity of the situation.
"The continuing brutal and bloody repression against the Libyan civilian population is revolting," French President Nicolas Sarkozy said in a statement. "The international community cannot remain a spectator to these massive violations of human rights."