Forces loyal to Libyan strongman Moammar Gadhafi closed in on key rebel positions on Monday, threatening to strangle the revolt even as the U.S., Europe and the United Nations continued debating possible military responses.

Col. Gadhafi's forces advanced on Ajdabiya, the last major population center between government-controlled territory and the de facto rebel capital, Benghazi. Libyan government warplanes bombed a major roundabout, dropped leaflets urging loyalists to hunt down "traitors" and left some residents fearful...