Defiant Gaddafi urges 'loyal Libyans' to fight on

Mustafa Abdel Jalil, head of the opposition Transitional National Council, yesterday authorised a two million Libyan Dinars (£1.15m) bounty for anyone handing over Muammar Gaddafi "dead or alive". He also offered an amnesty to any of his entourage who would "kill or capture him".

In London, Foreign Secretary William Hague said "Gaddafi must accept defeat", and in Paris Nicolas Sarkozy stressed "Gaddafi's time has run out."

Gaddafi's response was to appear on local television channel Al-Oruba TV, saying he had carried out a tactical retreat from Bab al-Aziziya. He vowed to fight on "until victory or martyrdom" and urged "loyal Libyans" to rise up and free the nation from the "devils and traitors" who have overrun it.

The posturing came as the battle for Tripoli continued and moved largely to the suburb of Abu Salim. In the corner of a street, a man who was shot in the crossfire, the back of his blue shirt soaked in blood, was being carried away by three others. "I know that man, he is a shopkeeper," said Sama Abdessalam Bashti, who had just run across the road to reach his home. "The rebels are attacking our homes. This should not be happening.

"The rebels are saying they are fighting government troops here, but all those getting hurt are ordinary people, the only buildings being damaged are those of local people. There has also been looting by the rebels, they have gone into houses to search for people and taken away things. Why are they doing this? They should be looking for Gaddafi, he is not here."

Abu Salim is the location of a prison which inspired fear among Libyans for generations. In 1996, after a riot by inmates, more than 12,000 of them were slaughtered; the bodies of many are yet to be found. Many were political prisoners accused of being Islamists. Most came from the east of the country and "the martyrs" has become a rallying cry for the uprising.

But Abu Salim is also deemed to be an area loyal to the regime and it has been one of the districts where the Gaddafi acolytes have distributed arms for the continuing resistance. That was certainly happening here yesterday with mortar and rocket fire being directed from behind nearby blocks on to Bab al-Aziziya, Colonel Gaddafi's fortress stormed on Tuesday evening.

Two "technicals" – gun-mounted flat-bed trucks –drove into a side road 50 yards away, the men at the back wearing civilian clothes, with no official markings making them indistinguishable from the opposition fighters. Soon afterwards two gunmen appeared on a sixth-floor balcony and fired off a burst then disappeared. "Some of them came from outside a few days ago, they do not live around here, but others are local," said Mohammed Selim Mohammed, a 38-year-old engineer. "Muammar has supporters here and for sure the government gave out guns. They also gave out money. But I don't think people are fighting for that, what good is money if you end up dead?"