Supporters of Moammar Gadhafi's Libyan regime tightened their grip on Tripoli, the capital, on Friday, celebrating the retreat of rebels from the nearby town of Zawiya.

The fierce battle over the western Libyan town, and the resulting retreat by opposition fighters, gave the Gadhafi camp fresh momentum against rebels seeking to oust the Libyan leader.

Reporters escorted into Zawiya could see that the main square, once a pocket of resistance, was under government control after weeks of fighting.

Zawiya is considered a vital strategic point because of its proximity to Tripoli, Gadhafi's main stronghold.

"What you are seeing here is the look of suppression," CBC's Adrienne Arsenault reported from the rubble-strewn scene, as soldiers swathed in green fired celebratory shots in the air and honked their cars horns in jubilation. \

Supporters also waved green flags — the colour of Gadhafi's regime and a tribute to his "Green Book" manifesto.

Farther east, government supporters continued firing at rebels on Friday near a key oil facility in a bid to disperse them and cut off their supply channels.

The rebels had taken refuge among silos containing crude oil and gas.

While pro-government fighters shelled the area earlier, they later began to redirect their targets, apparently to avoid blowing up the valuable oil infrastructure, rebels said.

Mohammed Gherani, a rebel fighter, said pro-government forces armed with rockets were now bombarding a main coastal highway about 16 kilometres east of the Ras Lanouf oil port to stop rebel vehicles trying to bring supplies to the port.

At least nine people have died so far in the two-day standoff at Ras Lanouf.

The ragtag rebel fighters dominate the eastern half of Libya and tried last week to advance westward toward Tripoli.

They encountered an overwhelming assault that included warplanes, artillery, rockets and tanks that sent them in retreat towards Ras Lanouf, 615 kilometres southeast of Tripoli.

Gadhafi's son vows to take back east

"They came from the air, they came from the sea, and there were rockets everywhere," said rebel fighter Mustafa Mehrik, a 39-year-old café owner. "It was a big surprise for us. Everyone is worried."

Heavier weaponry and attacks were rumoured to be coming from Benghazi, and the forces fighting for the uprising appeared to have thinned out, The Associated Press reported.

The anti-government rallies that began to rage last month were largely silenced, with roadblocks and a heavy police presence around the main Murad Agha mosque in Tripoli. Imams were warned by government text message not to allow protests after Friday prayers.

In a sign of growing confidence from the Gadhafi camp, the Libyan leader's son, Seif al-Islam, vowed to retake the eastern half of the North African nation.

No-fly zone debated

At a news conference Friday, Prime Minister Stephen Harper reiterated the government's stance on Libya, saying "all options are on the table" in terms of a future response from Canada.

"Our position is clear," he said. "Mr. Gadhafi should renounce his authority and leave his position for the sake of, and the welfare of, his country."

U.S. President Barack Obama has also called on Gadhafi to step down, although the White House has tried to distance itself from an assessment by James Clapper, director of national intelligence, that Libya's military was too strong and "the regime will prevail."

Meanwhile, the prospect of implementing a no-fly zone over Libya to protect civilians from Gadhafi's fighter jets was being vigorously debated.

The European Union said it would continue to keep open the option of military action in Libya. But Germany Defence Minister Thomas de Maiziere has insisted the Arab League must first throw its support behind a no-fly zone, so that foreign powers won't appear to be policing the country without support from the Arab world.

The Arab League meets Saturday in Cairo to discuss the Libyan crisis.

On Thursday, French President Nicolas Sarkozy said he fully recognized Libya's opposition council. In retaliation Friday, Libya officially suspended diplomatic relations with France.