An anti-Gadhafi fighter takes cover from sniper fire at a checkpoint north of Bani Walid Sept 19, 2011. [Photo/Agencies]

BANI WALID/SIRTE, Libya - Libya's interim government said its forces seized the airport and fort in Sabha, one of the last strongholds of forces loyal to Muammar Gadhafi which also controls the main route south out of Libya.

"Our forces are there in the airport and in the castle ... Our flags are flying there," Ahmed Bani, a military spokesman for the National Transitional Council (NTC), told a news conference in Tripoli on Monday. It was not possible to get independent confirmation.

Sabha, 770 km (480 miles) south of Tripoli and overlooked by an old fort built by Libya's former Italian colonial rulers, controls the main trail south to neighbouring Niger, an escape route used by members of Gadhafi's entourage.

Any advance on the town would be an important boost for government forces who have struggled to contain disunity in their ranks and faced stark reversals on other parts of the battlefield.

Nearly a month after Gadhafi was driven from power, his loyalist holdouts have beaten back repeated assaults by NTC forces at Bani Walid and Sirte, Gadhafi's birthplace. NTC fighters have been sent fleeing in disarray after failing to storm Gadhafi bastions.

NTC forces with huge rocket launchers and artillery gathered outside Sirte on Monday, saying their were preparing for a fresh assault, as hundreds of families fled the town.  

NTC fighter Mohamed Ahmed told Reuters the troops were advancing slowly, but holding back their heavy weaponry until civilians were clear.

Rockets fired by Gadhafi loyalists fell near NTC lines, throwing up clouds of dust.

Humanitarian groups have voiced alarm at reported conditions in Sirte.

"There's no electricity, no phone coverage. Nothing," resident Ibrahim Ramadan said, standing by a car packed with his family at a checkpoint.

Residents said homes had been destroyed and cars smashed to pieces as disorder spread through the city.

"People are fed up. There are explosions going off everywhere and you don't know where the bullets will come from next," said Abubakr, a resident making his way out of the city.

"Look at this," he said, pointing to a bullet hole in his windshield. "Bullets are coming down from above. People are just firing randomly."

 Mercenary report denied

NTC spokesman Bani denied an assertion by Gadhafi's spokesman that Gadhafi's forces had captured 17 mercenaries, some of them British and French, in the fight for Bani Walid. "There are no British or French prisoners" in the town, Bani said.

The report by Gadhafi's spokesman Moussa Ibrahim could not be verified and no immediate proof was presented.

"A group was captured in Bani Walid consisting of 17 mercenaries. They are technical experts and they include consultative officers," Ibrahim said on Syria-based Arrai television, which has backed Gadhafi.

"Most of them are French, one of them is from an Asian country that has not been identified, two English people and one Qatari."

French Foreign Minister Alain Juppe said there were "no French mercenaries in Libya", while the British foreign office said it had no information about whether the report was true. Qatar's foreign ministry was not available for comment. NATO, which is staging air strikes on Gadhafi loyalist positions, says it has no troops on the ground in Libya.

Western nations have sent special forces in the past, and media have reported that private security firms have aided anti-Gadhafi forces in training, targeting and with leadership.  

Bani said NTC forces on Monday arrested pro-Gadhafi mercenary leader Belqasem Al-Abaaj, who had been operating in the south of the country.