The situation grows more desperate in the Libyan city with increasing evidence of the use of cluster bombs against civilians

The city that has become the epicentre of a desperate battle by Libyan rebels against forces loyal to Muammar Gaddafi came under renewed pounding today amid mounting evidence of the use of cluster bombs against the besieged civilian population and calls for Nato to send in ground troops.

More than 100 rockets had been fired on opposition-held areas of Misrata by mid-morning and there were "raging battles" in two strategically key streets, according to rebels. The assault added pressure on the city's beleaguered hospitals, which are already overwhelmed with appalling injuries and a rising death toll. Most of the casualties are civilians, and they include many women and children, say doctors.

TV pictures showed scenes of devastation and desperation from inside the city – Libya's third largest, home to around 300,000 people – which has been under intense attack for seven weeks.

Mohamed, a rebel spokesman who asked for his full name to be withheld, told the Observer via Skype that "the killing and destruction and human suffering" was relentless. "The massacre that was prevented in Benghazi is now happening in Misrata. There is nowhere safe in the city."

Evidence that Gaddafi's forces are now targeting cluster bombs on civilian neighbourhoods of Misrata is likely to fuel calls for accelerated action from Nato, whose military actions and international sanctions against the regime have succeeded in weakening Gaddafi but have failed so far to secure a decisive breakthrough in the conflict.

Human Rights Watch released photographs and testimony from its arms expert which it said confirmed witness reports that the munitions, banned by more than 100 countries, were being fired on the city. Cluster bombs explode in midair, indiscriminately throwing out dozens of high-explosive bomblets which cause widespread damage and injuries over a large area. The sub-munitions often fail to explode on impact but detonate when stepped on or picked up.

"They pose a huge risk to civilians, both during attacks, because of their indiscriminate nature, and afterwards because of the still dangerous unexploded duds scattered about," said Steve Goose, HRW's arms division director.

The Libyan government denied its forces were using the munitions, challenging HRW to provide incontrovertible proof. Libya has not signed the convention on cluster munitions, which bans the use, production, stockpiling and transfer of cluster munitions.

Amnesty's Donatella Rovera said she had found "several bomblets and canisters all over the centre of town". Mohamed said Misrata's hospitals were seeing victims of what he described as "candy bombs – something that resembles a pretty bottle. You pick it up and it explodes and kills you."

Rebels hold the port area and the north and the east of the city, which is surrounded on three sides by government forces. Yesterday Tripoli Street and Heavy Transport Road leading to the port saw heavy fighting, said Mohamed. "He has identified the throat and he is going for it," he said. "Gaddafi's forces are trying to destroy the port and the port area at all costs. They know that it's the lifeline for Misrata and they want to cut it off."

Residents of the city are corralled in an ever-decreasing area, lacking adequate food, clean water, sanitation and medical supplies. Many homes now have multiple occupants as people have fled neighbourhoods under fire.

The electricity supply was limited to six hours every three days, said Mohamed, and food was becoming scarce – "especially vegetables and manufactured products like macaroni. There's been no water for God knows how long. Misrata is really feeling the effects of the siege and the destruction and the murderous shelling."

The shelling was "random, crazy," he said, adding: "No one feels safe in the city. There is nowhere safe to go. You can imagine the pressure and anxiety and fear that strikes into people."

Rovero, who arrived by boat in Misrata on Friday, said she had found "scores and scores" of Grad rockets in a residential neighbourhood of the city. They were "in people's bedrooms and kitchens, gardens, courtyards, in the streets. This neighbourhood was considered safe till yesterday, but is obviously no longer so. Families who had fled other areas had gone there, and yesterday after the shelling they left again to seek shelter elsewhere – but people are running out of places to shelter as more and more areas are coming under fire."

Mohamed said the large numbers of displaced people were "putting a strain on everyone. Seventy per cent of the population is crammed into 30% of the city. Schools, mosques and community centres are full of people."

Paulo Grosso, an Italian anaesthetist from the NGO Emergency, said the hospital where he is based, 2km from the frontline, had seen an average of 10 deaths and 40 wounded people each day. Most were civilians, including children. "We are seeing gunshot wounds, injuries from shelling and bomb explosions," he said. Twenty-three civilians were killed on Thursday alone. The hospital was suffering a critical shortage of nurses, he said, as the Filipino staff had fled.

A doctor from Médecins Sans Frontières, Morten Rostrup, said medical supplies were running critically short and that "doctors were being forced to discharge patients prematurely". Typical injuries were headshot wounds, brain damage, chest traumas and fractures. People with chronic medical conditions were also suffering because of the lack of supplies, he said.

Rebel boats from Benghazi carrying arms and aid to Misrata are attempting to dock in the port, along with international aid ships trying to evacuate civilians. The Libyan government claims that aid agencies are smuggling weapons to the rebels under the guise of aid.

Among those desperate to flee the city are more than 8,000 migrant workers. According to Mohamed, five Egyptians waiting to be rescued were killed last week on the dockside by shelling.

Rostrup said a large group of sub-Saharan Africans were living in "dire conditions" under plastic sheeting after heading to the city in the hope of being evacuated by sea. "They are desperate to leave the country. They've heard there are ships leaving, so they come." Gastro-enteritis was rife, he said.

Rebel fighters in Misrata have called on Nato to step up its airstrikes on loyalist positions around the city to protect the civilian population and aid the resistance. Nato has said that Misrata is its "number one priority". Barack Obama, David Cameron and Nicolas Sarkozy last week described the government attack on Misrata as a "medieval siege… to strangle its population into submission". In a jointly authored article, the three leaders wrote: "The brave citizens of those towns that have held out against forces that have been mercilessly targeting them would face a fearful vengeance if the world accepted [Gaddafi staying]. It would be an unconscionable betrayal."

The shift by the US, Britain and France towards regime change as a goal of the Nato operation is controversial among some countries that backed UN resolution 1973, which authorised military action to protect Libya's civilian population. But the three countries that have been the driving force behind the international coalition insist that Gaddafi must "go and go for good".

The Libyan government has refused to allow journalists based in Tripoli access to Misrata, citing security, although it permitted a team from the Red Cross to send a fact-finding mission to the city today. Its spokesman, Moussa Ibrahim, claimed that "terrorists and armed gangs" were behind the opposition and that "many so-called independent reporters are collaborating with the rebels". Calls for Nato to intensify its military operation were, said the deputy foreign minister, Khaled Kayim, "a clear call to target and kill civilians and destroy Libya's infrastructure. They [the international coalition] are siding with the rebels fighting a legitimate government. It has nothing to do with supporting democracy."

Nato itself is in a quandary about how to break the military deadlock in Libya. UN resolution 1973 specifically rules out a "foreign occupation force". Amid mounting calls for a Nato ground presence in Libya, politicians, lawyers and military chiefs are poring over the resolution's semantics to establish whether such a step – with its enormous political and military risks and implications – could be taken.

Mohamed said the rebel opposition in Misrata had appealed to Nato to send ground troops to relieve the city. They were, he said, grateful for the international coalition's military intervention. "But we're surprised. And we're angry. We are angered by the lack of hits on Gaddafi's troops by Nato forces.

"This reluctance and hesitation is allowing him to suffocate the city. It's unbearable. It's getting to the point where it's troops on the ground – or it's over. We are so grateful and relieved by the international community's efforts, it's just that they didn't go the extra steps, and that has played into the tyrant's hands.

"He will massacre the people of Misrata. If a massacre happens, [Nato's] credibility is on the line. Either they intervene immediately with troops on the ground – now, now, now – or we will all regret this. It's murderous and mad, the people of Misrata are paying the price."