Muammar Gaddafi's forces have shelled the besieged rebel frontline city of Misrata, hitting residential areas and wounding four people, a doctor said.
Nato rejected a claim by another doctor in the city that one of its air strikes killed 12 rebels in a friendly fire incident a day earlier.
The alliance, which is enforcing a no-fly zone to protect civilians, denied its planes bombed a building the rebels were said to be occupying.
Gaddafi's best trained forces are battling fiercely to try to uproot rebel fighters from their only major stronghold in the western half of Libya, which is home to the government's power centres and the capital, Tripoli.
Misrata has become the focus of fighting in recent weeks, as the other key front, in the eastern part of Libya that is largely under rebel control, has settled into a stalemate.
Today, government troops shelled residential areas about 12 miles (20 kilometres) from the Misrata's centre.
"The shelling started around 9:30 this morning and has been sporadic during the day," said a doctor who spoke via Skype on condition of anonymity for fear of reprisals.
Another doctor working in the city, Hassan Malitan, recounted details of what he believed was a Nato air strike on Wednesday on rebels holed up in a building about three miles (five kilometres) east of the port.
He believed the attack was a mistake but insisted it was caused by Nato aircraft. He said the strike came moments after he and another doctor visited the building.
"We drove about 200 metres and we heard a huge explosion that shook the earth," Malitan said. He said he looked back and saw smoke rising from where they had just sat with the men. As he and the other doctor began slowly driving back toward the building, a second missile crashed into it, Malitan said.
"We started crying and screaming out their names," he said. "It was clear that the missiles came from the sky and we heard the plane," he said.
Malitan said he was surprised to see rebels so far east, and said they assured him that they had been in contact with Nato forces about their location.
Wednesday was the second day of intense fighting around Misrata's Mediterranean port, the city's only lifeline to the outside world. A steady stream of boats have been bringing in humanitarian aid through the port and ferrying out hundreds of wounded civilians and foreign migrant workers who were trapped when the fighting broke out two months ago.
In Brussels, a Nato official denied that warplanes had bombed the building.
"There was no Nato attack on any building in or around Misrata," said the official.
Forces loyal to Gaddafi had been crowding around that area, a coastal road that leads from the capital, Tripoli, to the port. Nato forces targeted them in pummelling air strikes on Tuesday and Wednesday in an attempt to halt an advance on the port.
The Nato spokesman said the jets had struck a number of combat vehicles about 10 miles (16 kms) southeast of Misrata port on Wednesday, targeting an area where they had broken up a large group of pro-Gaddafi forces the day before.
"Nato cannot independently verify reports that these vehicles were operated by opposition forces," he said. "We deeply regret any loss of human life, as our mission in Libya is to protect civilians and civilian-populated areas against attack."
Aid agencies and human rights groups have sounded alarm bells about a growing humanitarian crisis inside the city and Nato has publicly acknowledged it needs to do more to protect civilians in Misrata.
Today, a senior UN official warned that massive food shortages will also hit Libya within two months unless stocks are replenished and distribution networks are supported.
The World Food Programme's regional director for the Middle East and North Africa, Daly Belgasmi, said current stocks might last only 45 to 60 days, after which many people will be forced to cut back on meals.