Rebel forces routed Moammar Gadhafi's loyalist troops in a battle over an oil port Wednesday, and have asked for outside air strikes to help them oust Libya's embattled leader.

At least 10 people were killed in the battle for control of Brega, a small port city on the Mediterranean Coast at the western edge of the opposition-controlled eastern part of the country.

Gadhafi again struck a defiant tone during a speech in the Libyan capital Tripoli on Wednesday, vowing to defend the North African nation to the "last man and last woman."

He warned he would turn Libya into "another Vietnam" if the U.S. or any other country attempted to intervene, warning foreign soldiers "will be entering hell and they will drown in blood."

Brega had been under rebel control until a convoy of between 50 and 100 vehicles packed with pro-Gadhafi forces launched a counter-offensive shortly after sunrise Wednesday morning, supported by warplanes that hit an ammunition dump.

Reports from the area suggest the convoy met little organized opposition from the small contingent that had been guarding the port, airstrip and oil facilities where about 4,000 personnel were working before the protests began.

Hours later, however, witnesses reported fighting had resumed as anti-regime fighters from Brega and nearby Ajdabiya regrouped on the outskirts of the city.

By the afternoon, rebels had cornered a group of pro-Gadhafi fighters who had left the oil installations for a nearby university campus. The Associated Press reports that at least ten opposition fighters were killed and 18 others injured in fierce fighting there, prompting angry chants of, "The blood of martyrs will not go in vain," from a crowd gathered at Brega's hospital.

In an apparent warning to the protesters besieging loyalist forces at the university, a warplane from Gadhafi's air force struck a nearby beach. Witnesses say the blast raised some sand, but caused no casualties.

After the standoff stretched into several hours, an AP reporter at the scene said the approximately 200 remaining Gadhafi loyalists eventually fled.

"The dogs have fled," one middle-aged fighter shouted, waving his rifle over his head in celebration.

According to an ambulance driver who was briefly detained by the pro-Gadhafi force, the fighters had been brought 320 kilometres to Brega area from Sirte in Gadhafi's remaining central Libya stronghold.

In the port city of Ajdabiya, approximately 65 kilometres from Brega, anti-Gadhafi fighters armed with an assortment of Kalashnikovs, hunting rifles, rocket-propelled grenade launchers and an anti-aircraft gun were preparing to fend off any returning pro-Gadhafi forces.

Reporting from Benghazi, CTV's Janis Mackey Frayer said anti-Gadhafi forces there were mobilized by reports of the fighting in the eastern cities.

"They are now trying to fortify Benghazi after word came that two towns have fallen back into the control of pro-Gadhafi troops," Mackey Frayer said.

"This is where the uprising began, and it appears with the dynamic shifting, that it's returning here."

After a week focused on securing Gadhafi's hold on the capital Tripoli and other cities in the west, the fighting around Brega marks his forces' first push into the opposition-controlled eastern swath of the country that stretches all the way to the Egyptian border.

Gadhafi lashes out

Meanwhile in the Libyan capital, the country's embattled but undaunted leader told a gathering of supporters and foreign media that an al Qaeda "sleeper cell" consisting of former Guantanamo Bay detainees was behind the uprising.

Striking his familiar defiant, if rambling, tone, Gadhafi told the crowd gathered at a Tripoli conference hall that he could not meet protesters' demands to relinquish power because it is actually in the hands of the Libyan people.

Warning of a deadly toll if foreign forces intervene in his country, Gadhafi vowed to fight to the "last man and last woman. We will defend Libya from the north to the south."

Recalling Libya's history under colonial Italian rule, Gadhafi said he would not submit the country to that fate again.

"We will not accept a similar American intervention. This will lead to a bloody war and thousands of Libyans will die if America and NATO enter Libya," he said.

Gadhafi also directed a warning to European nations.

"Africans will march to Europe without anyone to stop them. The Mediterranean will become a centre for piracy like Somalia," he said.

Following Gadhafi's latest comments, his detractors took to the streets of Benghazi in a demonstration of their own resolve.

"There were hundreds of people here in Benghazi who gathered at a square to make a bonfire of the Green Book," Mackey Frayer said in an interview with CTV's News Channel, emphasizing the symbolism of destroying Gadhafi's guiding doctrine.

"It was very much their message that they've had a taste of freedom and they're not about to give it up," she said.

International pressure

Gadhafi's latest speech comes amidst increasing efforts to isolate him politically as well as an approaching flotilla that includes the U.S. amphibious assault ship USS Kearsarge and the amphibious transport dock USS Ponce.

As the UN Security Council has not authorized the use of armed force against Gadhafi's regime, U.S. Defence Secretary Robert Gates told reporters the deployment was intended to support emergency evacuations and humanitarian relief.

Defence Minister Peter MacKay has offered similar explanations for Ottawa's decision to send the Canadian frigate HMCS Charlottetown to the region, telling CTV's Canada AM on Wednesday that as many as 250 Canadians remain in Libya.

On Tuesday, the UN General Assembly adopted a resolution to suspend Libya's membership in its Human Rights Council.

Commenting on the unprecedented decision, UN Secretary-General Ban Ki-moon said the message was clear.

"The world has spoken with one voice," he told members of the General Assembly. "We demand an immediate end to the violence toward civilians and full respect for their fundamental human rights, including those of peaceful assembly and free speech."

The UN's refugee agency estimates as many as 150,000 people have fled Libya for neighbouring Egypt and Tunisia since the uprising began on Feb. 15.

Unconfirmed estimates peg the death toll from the nearly two weeks of fighting at as many as 2,000.

With files from The Associated Press