A police coastguard boat travels past US amphibious assault ship USS Kearsarge as it sails through the Suez canal in Ismailia, about 120 km (75 miles) north of Cairo, March 2, 2011. [Photo/Agencies]

TRIPOLI, Libya - Two US warships were heading toward Libya on Wednesday as the West started flexing its military muscle and rebels fighting Muammar Gadhafi's regime began organizing the trappings of parallel government.

The USS Kearsarge and the USS Ponce carrying marines and equipment entered the Mediterranean Sea en route to Libya, the Suez Canal Authority said.

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The Kearsarge amphibious ready group, with about 800 marines, a fleet of helicopters and medical facilities, could support humanitarian efforts as well as military operations.

"We're certainly moving assets to be closer (to Libya)," a US defense official said in Washington on Tuesday. "A ship like the Kearsage is capable of many types of missions."

Western powers are arguing over imposing a proposed no-fly zone over Libya to support rebels fighting Gadhafi's regime. Some opposition figures in Libya have begun calling for air strikes.

Protesters against Gadhafi's four-decade rule have seized control of most of the country despite a fightback by his forces. Tripoli remains under his control and largely peaceful. Key oil fields in the east have fallen to the opposition.

A hardline Gadhafi

Muammar Gadhafi repeated in a speech at a ceremony in Tripoli on Wednesday that he holds no real power in Libya, as rebel forces repelled an offensive by his forces east of the capital.

"The world must understand this truth: There is no place for a president, a king, or a leader in the Jamahiriya system," he said in front of dozens of supporters at the ceremony to mark 34 years of "people power".

The ceremony was aired live on Libyan television on Wednesday.

The event marked the anniversary of the launch of the People's Committees, according to the broadcaster.

Reading from a prepared text, Gadhafi's speech was frequently interrupted by chants, which he duly praised.

"The Libyan people challenge ... even Muammar Gadhafi who has no power," said Gadhafi, who rose to power after a coup against Libya's monarchy in 1969.

"When the People's Committees issue something, it becomes law and is implemented for all Libyans. No one can declare war or peace unless the People's Committees decide," the Libyan leader said.

"Muammar has no real power to surrender."

Rebels keep fighting

Forces loyal to Muammar Gadhafi battled government opponents for control of a key oil installation and an airstrip on Wednesday on the Mediterranean coast in a counter-offensive against the rebel-held eastern half of the country.

The fighting was centered on the oil facilities at Brega, which the opposition has held for days. In the morning, witnesses reported that it was retaken by a large convoy of pro-Gadhafi forces. But hours later, witnesses on the outskirts of Brega said fighting resumed.

They said some of the regime forces were surrounded by rebels. The sound of screaming warplanes and the crackle of heavy gunfire could be heard as the witnesses spoke to The Associated Press by phone. Opposition fighters at checkpoints outside Brega said the opposition had retaken the oil facilities and the airstrip.

Brega lies at the western edge of the swathe of opposition-controlled territory of eastern Libya. At the nearby rebel-held city of Ajdabiya, pick-up trucks full of anti-Gadhafi fighters carrying automatic weapons, along with a tank, sped out toward the oil port, 70 km away.

AFP-AP