Hundreds of families have fled their homes in the eastern Libyan city of Benghazi as street fighting raged between rival armed groups in the city.

The fresh clashes erupted when the army, backed by the forces of former army general Khalifa Haftar and armed youths, stormed several districts to take military installations from self-declared Islamist rebels.

Now we finished combing and cleaning more than 70 percent of Benghazi. Now we are surrounding Al Salmani and Ras Adiba. These areas are full with terrorists and we have them completely surrounded. Military commander, Faraj Barasi

The military entered the city with weapons and ammunition loaded in about 70 military vehicles, Al Jazeera’s correspondent in Benghazi said.

Rockets and artillery shells hit residential districts, residents said.

Al Jazeera’s Mahmoud Abdel Wahed said the violence has forced hundreds of families to flee to safer towns. Wahed said the city "was witnessing complete paralysis" after the closure of schools, universities and shops.

Almost 200 people have been killed during two weeks of street fighting, medics said.

Benghazi, home to several oil firms, has been a battlefield since May when Haftar declared war on rebel group such as the Ansar al-Sharia - blamed by Washington for a 2012 attack on the US consulate that killed the American ambassador.

Plunged into anarchy

The army has made some ground,expelling the self-declared Islamists from the airport and seizing of one of their strongholds in the port city. It says it now aiming to push them from their final holdouts.

"Now we finished combing and cleaning more than 70 percent of Benghazi. Now we are surrounding Al Salmani and Ras Adiba. These areas are full with terrorists and we have them completely surrounded," military commander, Faraj Barasi, told the Reuters news agency.

Libya was plunged into anarchy when an armed faction from the western city of Misrata seized the capital in August after fighting with militiamen from the rival city of Zintan who had held the capital's airport since the 2011 revolt that overthrew Muammar Gaddafi.

The North African country has had two competing governments and parliaments since the rebels seized Tripoli, setting up its own cabinet and assembly.

Libya's internationally-recognised Prime Minister Abdullah al-Thinni said on Wednesday that he was ready for peace talks with the group that controls Tripoli. Al-Thinni's government now meets in the eastern city of Tobruk.