Libyan rebels captured a border post to Tunisia thought to be a possible escape route for fugitive leader Moammar Gadhafi late on Friday.

A Tunisian official said that pro-Gadhafi loyalists had fled as more than 100 rebels arrived and raised their flag over the frontier post.

Meanwhile, Egyptian state news agency MENA quoted a rebel source as claiming that a motorcade of armored cars accompanied by loyalist forces had been seen crossing into Algeria. It is believed that the six vehicles that entered the Algerian town of Ghadames could have been carrying officials from the former regime - or even Gadhafi himself.

Fight spreads to Gadhafi's hometown

With loyalists still putting up resistance in the capital Tripoli, in Gadhafi's coastal hometown of Sirte and deep in the inland desert, it is thought that fighting could go on for some time.

The UK's Ministry of Defense confirmed that British forces assisted the rebels by sending Tornado warplanes to bomb a bunker in Sirte overnight. Sirte is one of the last places in Libya still largely under Gadhafi's control.

Pro-Gadhafi forces shelled Tripoli airport, damaging a plane, on Friday with sporadic gunfire heard in the surrounding the area.

Rebels were still searching for Gadhafi's forces in the Tripoli district of Abu Salim, after they claimed the area following heavy fighting on Thursday. The district was one of the main areas to have remained under loyalist control.

The uprising began in the city of Benghazi in February

Shifting power base

The National Transitional Council (NTC) announced earlier on Friday that it was shifting its power base from the eastern city of Benghazi to the Libyan capital, Tripoli.

"In the name of the martyrs ... I proclaim the beginning of the work of the executive office in a free Tripoli as of this moment," Ali Tarhouni, acting finance and oil minister for the rebel council, told reporters.

"Long live democratic and constitutional Libya," said Tarhouni, announcing the holders of key posts in a new provisional government.

The move is seen as a crucial step in uniting the east and west of a country fragmented by regional and tribal divisions. Rebels say half of the council's members have already moved from Benghazi, where the uprising began in February, to Tripoli.

Gadhafi has issued several messages of defiance, urging supporters to resist rebels

Still on the run

Although fugitive leader Moammar Gadhafi remains on the run, the NTC claimed his capture was not a prerequisite for setting up their new administration.

"We can start rebuilding our country," said Tarhouni. "He [Gadhafi] is the one who is basically in the sewer - moving from one sewer to another."

The whereabouts of Gadhafi remain a mystery after he broadcast a fresh message on Thursday urging supporters to defy the rebels.

But Tarhouni urged troops loyal to Gadhafi to lay down their arms, promising they would be treated according to the rule of law.

Meanwhile, the UN Security Council has released $1.5 billion (1 billion euros) of seized Libyan assets to be used for emergency aid.

Next Thursday, French President Nicolas Sarkozy will host a meeting of the Friends of Libya contact group, where he will be pushing for millions in Gadhafi's frozen assets to be released to the rebels.

African Union waits to decide

The African Union (AU) called for an inclusive government for Libya, rejecting the rebels as the legitimate representatives of the country.

"There is a process in Libya wherein the NTC forces are in the process of taking over Tripoli...but there is still that fighting going on," South African President Jacob Zuma said at the AU's Peace and Security Council meeting in the Ethiopian capital, Addis Ababa.

AU Commission spokesman Noureddine Mezni said that Gadhafi was no longer seen as Libya's leader and called for a "consensual and inclusive government."

Author: Nicole Goebel, Richard Connor (AFP, dpa, Reuters)

Editor: Rob Turner, Ben Knight