Libya on edge as Kadhafi forces fight back in west.

BENGHAZI: Libya was on edge Friday as forces loyal to Moamer Kadhafi's crumbling regime staged a bloody fight back in western towns near Tripoli, as the east declared itself free of his iron-fisted rule.

Outraged Western governments scrambled to craft a collective response to the crisis in the oil-rich North African state, including possible sanctions against Kadhafi's remaining loyalists and a freeze on assets they are believed to have salted away abroad.

But governments were constrained by fears of reprisals against nationals still stranded amid what escaping expatriates described as hellish scenes as evacuation efforts dragged on the 11th day of the crisis.

In Az-Zawiyah, west of Tripoli, 23 people were killed and 44 wounded on Thursday when regime loyalists mounted a ferocious rearguard action against protesters in the key oil refinery town, Libya's Quryna paper reported.

"The wounded cannot reach the hospitals because of shots being fired in all directions," said the paper, based in now the opposition-held eastern city of Benghazi quoting its correspondent in Az-Zawiyah.

Heavy fighting was also reported in Libya's third city Misrata, to the west of capital.

In Zouara, further west towards the Tunisian border, fleeing Egyptian workers said the town was in the control of civilian militias after fierce fighting on Wednesday evening.

Addressing his divided nation on Thursday for the second time in three days, Kadhafi, 68, accused residents of the town of siding with Al-Qaeda leader Osama bin Laden. "You in Zawiyah turn to Bin Laden," he said. "They give you drugs.

"It is obvious now that this issue is run by Al-Qaeda," he said, addressing the town's elders. "Those armed youngsters, our children, are incited by people who are wanted by America and the Western world.

"They have guns, they feel trigger happy and they shoot especially when they are stoned with drugs."

In marked contrast to a 75-minute address from a podium outside his Tripoli home on Tuesday, Kadhafi spoke by telephone from an undisclosed location in an intervention that lasted barely 20 minutes.

His decision to speak by telephone rather than make an on-screen appearance has raised questions about his whereabouts, and indicates that his power base may be shrinking.

In Tripoli, the streets have been largely deserted in recent days but worshippers were expected to turn out at the mosques for the main weekly prayers on Friday.

Libya's second city of Benghazi, where the unprecedented protests against Kadhafi's four decade rule first erupted, was firmly in the hands of Kadhafi's opponents.

Effigies apparently of Kadhafi hung from street lamps in the eastern city and children played on top of an abandoned tank. Police stations had been gutted by fire but residents said there had been no looting.

In the courthouse outside which the demonstrations started, regime opponents set up a revolutionary headquarters to take over the administration of the city as civilian militiamen and mutinous regular army troops patrolled the streets.

Some soldiers were selling their weapons to the highest bidder even as their defecting commanders strove to forge their men into an organised anti-Kadhafi force.