Libyan strongman Moamar Gaddafi has warned "thousands" will die if the West intervenes to support the uprising against him, as rebels drove back an attack by his forces on an eastern town.
The chilling warning came as Western powers dampened expectations of any early imposition of a no-fly zone over Libya, amid a clamour from Western states for action to prevent Mr Gaddafi's warplanes from attacking his own people.
Rebels called for foreign air strikes on African mercenaries they said were helping Mr Gaddafi stay in power.
But the veteran ruler warned much blood would be shed in "another Vietnam" if foreign powers intervened in the crisis.
"We will enter a bloody war and thousands and thousands of Libyans will die if the United States enters or NATO enters," Mr Gaddafi told Tripoli supporters at a gathering televised live.
"We are ready to hand out weapons to a million, or 2 million or 3 million, and another Vietnam will begin. It doesn't matter to us. We no longer care about anything."
Government troops briefly captured the strategic town of Brega, an oil export terminal, before being driven back by rebels who have held the town 800 kilometres east of Tripoli for about a week, rebel officers said, adding they were ready to move westwards against Mr Gaddafi's forces if he refused to quit.
Witnesses said the attack was backed by heavy weapons and air strikes. Further bombing raids near the oil terminals were carried out in the afternoon. Estimates of the death toll during the day ranged between five and 14.
The assault on Brega appeared to be the most significant military operation by Mr Gaddafi since the uprising erupted in mid-February and set off a confrontation that Washington says could descend into a long civil war unless he steps down.
One of the witnesses said Mr Gaddafi's forces were two to three kilometres from the city centre and had 300-350 rebels pinned down at an oil industry airport on the city outskirts.
There has been talk among the international community of the possibility of imposing a no-fly zone over Libya, but US defence secretary Robert Gates says such a move would first require an attack to cripple Libyan air defences.
"One of our biggest concerns is Libya descending into chaos and becoming a giant Somalia," secretary of state Hillary Clinton told US lawmakers.
Washington says it will keep pressure on Mr Gaddafi to quit, and is moving ships and planes closer to Libya in what is widely seen as a symbolic show of force.
On Wednesday two US amphibious assault ships, the USS Kearsarge and the USS Ponce, passed through Egypt's Suez Canal arriving in the Mediterranean.
The White House said the ships were being redeployed in preparation for possible humanitarian efforts but stressed it "was not taking any options off the table".
Mr Gates said: "Our job is to give the president the broadest possible decision space."
"Let's just call a spade a spade. A no-fly zone begins with an attack on Libya to destroy the air defences ... Then you can fly planes around the country and not worry about our guys being shot down," he told a congressional hearing.
Mr Gaddafi, who once said ballot box democracy was for donkeys, told the gathering in Tripoli the world did not understand he had given power to the people long ago.
"We put our fingers in the eyes of those who doubt that Libya is ruled by anyone other than its people," he said, referring to his system of "direct democracy" launched at a meeting attended by visiting Cuban leader Fidel Castro in 1977.
Referring to an unprecedented two-week-old popular uprising against his rule, Mr Gaddafi also called for the United Nations and NATO to probe what had happened in Libya, and said he saw a Conspiracy to colonise Libya and seize its oil.
Let's hope the West has learned from their excursions into Iraq and Afghanistan. Let the people of Libya fight for their own democracy. We can freeze bank accounts and put aid agencies at the border, but, in my opinion, we (the US) should take no further action.
I agree, there is also the fact that the US, and other western countries, could not afford another war. We can provide humanitarian aid, and look after those that have fled the country, plus sanctions, but the only reason to send in troops, would be the securing of oil reserves, just like Iraq, and this would be very wrong.
I hope that someone will just bump off Gaddafi, and without the madman at the top, support would crumble.
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Gaddafi threatens bloodbath in Libya. 
