French reconnaissance planes flew over Libya on Saturday, in the first sign that international air strikes may be imminent while Muammar Gaddafi's forces tried to push into the rebel-held city of Benghazi.
"There are French reconnaissance aircraft over Libya," a French military source told Reuters at 1415 GMT.
The advance by Gaddafi's troops into Libya's second city of 670,000 people appeared to be an attempt to pre-empt Western air strikes which diplomats say will come after an international meeting currently underway in Paris.
A Libyan rebel spokesman said Gaddafi's forces had entered Benghazi while a Reuters witness saw a jet circling over the city shot down and at least one separate explosion near the rebel movement's headquarters in the city.
"They have entered Benghazi from the west. Where are the Western powers? They said they could strike within hours," rebel military spokesman Khalid al-Sayeh told Reuters.
Hundreds of cars full of refugees headed east from Benghazi towards the Egyptian border. One family of 13 women from a grandmother to small children, fled Benghazi on Saturday morning.
"I'm here because when the bombing started last night my children were vomiting from fear," said one of them, a doctor, sitting crying in the lobby of a hotel on the road to Egypt. "All I want to do is get my family to a safe place and then get back to Benghazi to help. My husband is still there."
In the besieged western city of Misrata, residents said government forces shelled the rebel town again on Saturday and they were facing a humanitarian crisis as water supplies had been cut off for a third day.
"I am telling you, we are scared and we are alone", a Misrata resident, called Saadoun, told Reuters by telephone.
Gaddafi said Western powers had no right to intervene.
"This is injustice, this is clear aggression," government spokesman Mussa Ibrahim quoted Gaddafi as saying in a letter to France, Britain and the United Nations. "You will regret it if you take a step towards interfering in our internal affairs."
The Libyan government blamed the rebels, who it says are members of al-Qa'ida, for breaking the ceasefire around Benghazi.
As explosions shook Benghazi, rebel fighters said they were being forced to retreat from the outskirts of the city, but later claimed victory after holding back the advance, as they have in other towns they eventually lost to government troops.
"We revolutionaries have taken control of four tanks inside Benghazi. Rebel forces have pushed Gaddafi's forces out of Benghazi," said Nasr al-Kikili, a lawyer who works for the rebel media centre in Benghazi, as crowds celebrated by firing guns in the air and parading on top of a tank.
Earlier, an unidentified fighter jet was shot down over Benghazi.
"I saw the plane circle around, come out of the clouds, head towards an apparent target, and then it was hit and went straight down in flames and a huge billow of black smoke went up," Reuters correspondent Angus MacSwan said.
"It seems it was attacking the Benghazi military barracks."
Benghazi residents were angry at the West's delay. "Europe and America have sold us out. We have been hearing bombing all night, and they have been doing nothing. Why? we have no one to help us but God," said Hassan Marouf, 58, standing outside the door of his house in Benghazi.
"Us men are not afraid to die, but I have women and children inside and they are crying and in tears. Help us."
Inside the city, residents set up make-shift barricades with furniture, benches, road signs and even a barbecue in one case at intervals along main streets. Each barricade was manned by half a dozen rebels, but only about half of those were armed.
Al Jazeera said there were 26 dead and more than 40 wounded in Jala hospital in Benghazi, without giving further details.
US Secretary of State Hillary Clinton was meeting European and Arab leaders in Paris to discuss coordinated intervention in Libya. A source close to the meeting said air strikes could start as soon as talks end.
France, Britain and Canada could take part jointly in an initial intervention, the source said, while the United States could participate later on and any participation by Arab nations would come after that, he said.
But Canada would need two more days to get its jets ready, a government spokesman told Reuters.
Ambassadors from the 28 Nato states adjourned a meeting in Brussels on Saturday to discuss possible Nato involvement in policing Libyan skies till after the talks in Paris.
Within hours of President Barack Obama saying the terms of a UN resolution meant to end fighting in Libya were non-negotiable, his UN envoy Susan Rice, asked by CNN whether Gaddafi was in violation of these terms, said: "Yes, he is."
Obama made clear any military action would aim to change conditions across Libya - rather than just in the rebel-held east - by calling on Gaddafi's forces to pull back from the western cities of Zawiyah and Misrata as well as from the east.
"All attacks against civilians must stop," Obama said, a day after the UN Security Council passed a resolution authorising international military intervention.
"Gaddafi must stop his troops from advancing on Benghazi, pull them back from Ajdabiya, Misrata and Zawiyah, and establish water, electricity and gas supplies to all areas. Humanitarian assistance must be allowed to reach the people of Libya ...
"Let me be clear, these terms are not negotiable... If Gaddafi does not comply ... the resolution will be enforced through military action."