The African Union says it wants to join efforts to stop the fighting in Libya, but the organization's Peace and Security Council is rejecting any kind of foreign military intervention.

"The current situation requires urgent African action in order to facilitate immediate cessation of hostilities," Ramtane Lamamra, commissioner of the council, told a news conference in Ethiopia's capital, Addis Ababa.

The African Union has set up a panel of five heads of state to travel to Libya shortly to help ease the hostilities in the north African country, Reuters reported.

As the fighting continued, Libyan forces firing rockets and tank shells forced rebels to retreat from the strategic oil port of Ras Lanouf on Thursday.

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Lightly armed opposition members sped back to their territory by the hundreds, fleeing eastward in cars and pickup trucks mounted with machine-guns, The Associated Press reported.

A rebel official in the town of Ajdabiya said Gadhafi's troops and tanks were battling the insurgents at the western entrance to Ras Lanouf and using gunboats to fire on the rebels from the sea.

"These are tough battles," said Akram al-Zwei, a member of the post-uprising town committee. "We are fighting against four battalions heavily equipped with airpower, tanks, missiles, everything."

Seif al-Islam Gadhafi, one of Moammar Gadhafi's sons, told Reuters on Thursday that Libyan forces will keep and will never surrender, even if Western powers intervene in the escalating conflict.

"This is our country," he told the news agency. "We will win."

Taking back Ras Lanouf would be a major victory for Gadhafi, re-establishing his power over a badly damaged but vital oil facility and pushing his zone of control farther along the main coastal highway running from rebel territory to Tripoli, the Libyan capital.

NATO considers options

The assault on Ras Lanouf comes as Western nations struggle to find a way to stop the escalating violence, which is aimed at forcing longtime leader Moammar Gadhafi out of office.

Anders Fogh Rasmussen, the NATO secretary general, said Thursday the international community is united in condemning the "outrageous and systematic violence" against the Libyan people.

He said the alliance has been in regular contact with other international organizations as it tries to determine the best course of action, noting "time is of the essence" as the conflict in the north African country escalates.

Rasmussen said NATO has agreed to move ships to the Mediterranean in response to the Libyan crisis, but stopped short of announcing any major interventions or the imposition of a no-fly zone over the country.

"We considered as well, initial options regarding a possible no-fly zone, in case NATO were to receive a clear United Nations mandate," he said after a meeting of defence ministers in Brussels. "Ministers agreed that further planning will be required."

A Libyan youth has his face painted in the colours of his country's pre-1977 flag during a protest in eastern Libya on Thursday. ((Kevin Frayer/Associated Press))

Rasmussen said any NATO action in Libya would have to be based on a demonstrated need and a clear legal mandate, along with strong support from other countries in the region.

Gadhafi has vowed to fight any attempt to impose a no-fly zone on the north African country.

NATO's meeting comes after France became the first nation to formally recognize the Libyan opposition.

"We must now engage in dialogue with the new representatives in Libya," French Foreign Minister Alain Juppe said.

People in the eastern city of Benghazi, where the rebel group is based, honked and cheered to celebrate the announcement, Reuters reported.

Meanwhile, Germany froze billions in assets of the Libyan Central Bank and other state-run agencies. The U.S., U.K., Canada other countries have also frozen Gadhafi's assets.

"The international assets that are being frozen does make a difference for the money that's out of the country," CBC's Adrienne Arsenault said from Tripoli. "But it's also important to remember that Gadhafi has amazing reserves of cash within this country.

"He can last for quite some time while the international community continues to debate what it's going to do."

Casualties rising

Meanwhile, the president of the International Red Cross said doctors have seen a dramatic rise in the number of casualties in Libya, including many civilian deaths.

Jakob Kellenberger said Thursday in Geneva that local doctors over the past few days saw "a sharp increase in the number of casualties arriving at hospitals in Ajdabiya and Misrata," where there has been heavy fighting and airstrikes.

His comments come after Gadhafi accused Western media of exaggerating the number of casualties during the uprising, which aims to oust the leader.

Kellenberger said that in Misrata, 40 patients were treated for serious injuries and 22 dead were taken there. He said the Red Cross surgical team in Ajdabiya operated on 55 wounded this past week and "civilians are bearing the brunt of the violence."

The aid organization is cut off from access to western areas, including Tripoli, said Kellenberger, but he believes those areas are "even more severely affected by the fighting" than eastern rebel-held territories.

The UN estimates more than 200,000 people have fled Libya to escape the violence.

Pro-democracy demonstrations have been pushing for change since mid-February. Gadhafi, who has been in power since 1969, has consistently rejected calls to step aside and has blamed al-Qaeda and Western infiltrators for the unrest in Libya.