Libyan rebels seized two localities near the Tunisian border on Thursday as part of their pre-Ramadan offensive aimed at unseating strongman Moamer Kadhafi, an AFP correspondent said.
The first was the town of Al-Ghazaya, some 12 kilometres (nine miles) from the frontier and the second was Umm Al-Far, a hamlet of a few hundred inhabitants 10 kilometres northeast of there.
The assault on Al-Ghazaya began at around 8:00 am (0600 GMT) in a two-pronged attack from the east and west that appeared to have drived loyalists out, as the town was deserted when they entered.
However, ammunition was found stored in a school and other public villages in the town.
The rebels then moved on to Umm Al-Far and bombarded it, blowing up a munitions dump. The hamlet fell around 5:00 pm, and rebels, mostly on foot, were moving through the streets to secure them a half hour later.
The capture of Al-Ghazaya, being used as a base by Kadhafi troops to fire rockets onto rebel forces in nearby Nalut town, followed a defiant speech by the Libyan leader that he is ready to "sacrifice" to ensure victory in the civil war.
The early morning assault from the surrounding mountains was part of the offensive by the rebels aimed at marching on Tripoli and toppling Kadhafi.
Initial attacks had begun on Wednesday, a military source told an AFP correspondent in Zintan, in the Nalut region of western Libya.
Before the rebels overran the town, an AFP correspondent saw dozens of army vehicles pulling out in the face of rebel artillery fire from heights overlooking Al-Ghazaya.
The Nafusa mountains have seen some of the fiercest fighting between loyalist troops and rebel forces.
The two sides had fought their way into a stalemate five months after the start of a popular uprising that quickly turned into a civil war.
The Libyan leader controls much of the west and his Tripoli stronghold, while the opposition holds the east from its bastion in Benghazi.
A defiant Kadhafi said late Wednesday he is ready to "sacrifice" to defeat the rebels after they warned the deadline for him to step down and stay in Libya has expired.
"We are not afraid. We will defeat them," Kadhafi said in an audio message, referring to the NATO alliance and the insurgents.
"We will pay the price with our lives, our women and our children. We are ready to sacrifice (ourselves) to defeat the enemy," he added in a message to loyalists in the town of Zaltan, also near the Tunisian border.
Kadhafi also called on his partisans to march on Nafusa and urged his opponents to surrender.
"Traitors, surrender your weapons... Choose: death or surrender," Kadhafi told the rebels, adding without NATO support the insurgents could not have seized the strategic mountains.
Kadhafi's message came after the chief of the rebel National Transitional Council said in Benghazi that an offer they had made through the UN that would have allowed the strongman to remain in Libya if he stepped down had lapsed.
NTC chairman Mustafa Mohamed Abdel Jalil said the rebels had delivered to UN special envoy Abdul Ilah al-Khatib "a very specific, well-intentioned offer that Kadhafi can stay in Libya under three conditions.
"We made a proposal. The deadline has passed. The proposal has expired," he told reporters of the month-old offer.
Under the offer, Kadhafi would have had to step aside and relinquish all responsibilities, his place of residence would be the "choice of the Libyan people" and he would be under "close supervision," Abdel Jalil said.
"The period of this proposal has passed," he said.
In Mauritania, Khatib said greater cooperation was needed with the African Union to find a political solution to the conflict.
"We agreed that there must be greater coordination between UN and AU efforts to find a political solution to the Libyan crisis," Khatib said after a meeting with President Mohamed Ould Abdel Aziz, the head of the AU panel on Libya.
Meanwhile, Britain gave a major boost to the rebels by inviting them to take over the Libyan embassy in London, which the Kadhafi regime slammed, while Washington said it was examining a request by the rebels to recognise them.
In London, Foreign Secretary William Hague said Britain has expelled all remaining staff at the embassy and recognised the NTC as Libya's sole legitimate government.
The rebels said Thursday they had nominated Mahmud Nacua, a Libyan exile, as their London envoy.
Libyan Deputy Foreign Minister Khaled Kaaim slammed Britain's decision as "irresponsible and illegal", while the NTC chairman hailed the decision.
For his part, the NTC's Abdel Jalil said "we express tremendous appreciation for this recognition."
The council expects Britain and Turkey to become the first countries to release some of Libya's frozen assets, which he said "unfortunately have not been liquidated to date."
In that vein, Hague said Britain would also unlock Â£91 million ($149 million, 102 million euros) of Libyan oil assets frozen under a UN Security Council resolution so the rebels could benefit from them.