Libya's defiant leader Moamar Gaddafi could be allowed to stay in the country if he hands over power under a new French proposal to end the five-month conflict.

Rebel forces in Libya have suffered more heavy casualties in Brega, the eastern oil town that still blocks their attempt to move on the capital Tripoli.

In the latest clashes about 20 rebel fighters were killed and scores wounded.

Rebels also reported heavy fighting near the western town of Misrata, an insurgent stronghold.

Now France has signalled a new attempt to find a diplomatic solution to the war, offering to let Gaddafi stay in Libya if he agrees to hand over power.

The proposal reflects an awareness that it would be hard, if not impossible, to flush him out of Tripoli by force or persuasion.

But his foreign minister has already rejected the idea, saying again that Gaddafi's departure is not up for negotiation.



Meanwhile, the United States has said Gaddafi must quit, but added that whether he remains in Libya after that would be up to the Libyan people.

