The hunt is on for Libya's embattled leader Moammar Gadhafi as his 42-year rule teetered on the brink of collapse on Monday and world leaders begun planning for Libya's future without the tyrannical dictator.

The whereabouts of Gadhafi remained unknown as rebels pushed deep into the capital, approaching his main compound.

Hundreds of Libyans living abroad celebrated in the streets in the Middle East and Europe, taking over embassies and burning effigies of Gadhafi.

U.S. officials said on Monday that Libyan forces fired a Scud missile, but it was unclear where it landed and it is unknown whether anyone was hurt.

The short-range missile was launched near Sirte, Gadhafi's hometown.

Gadhafi's son, Seif al-Islam, who was reported arrested by rebels, turned up early Tuesday at a hotel in Tripoli. He then took reporters in his convoy on a drive through the city.

Rebel spokesman Mohammed Abdel-Rahman said Libya is still in danger as long as Gadhafi remains on the run.

Mustafa Abdel-Jalil, the head of the National Transitional Council, said that the rebels have no idea where Gadhafi is and whether he is even in Tripoli.

"The real moment of victory is when Gadhafi is captured," Abdel-Jalil said in a news conference.

U.S. President Barack Obama said the situation reached a tipping point in recent days but that the situation remains fluid and that elements of the regime still remain a threat.

"The Gadhafi regime is coming to an end, and the future of Libya is in the hands of the its people," Obama said while vacationing in the U.S.

An Obama administration official said the U.S. had no indication that Gadhafi has left Libya.

Britain said its frozen Libyan assets would be released soon to help the rebels in Libya establish order and France announced plans for an international meeting next week.

British Prime Minister David Cameron is scheduled to discuss Gadhafi in phone calls with Obama, French President Nicolas Sarkozy, Canada's Prime Minister Stephen Harper and the leaders of Qatar and the United Arab Emirates.

On Sunday, NATO-supported rebel forces stormed into Tripoli with surprising ease and the international community began calling on Gadhafi to step down.

Early Monday, clashes broke out between the rebels and a few Gadhafi troops operating tanks outside his Bab al-Aziziya complex.

After an Associated Press journalist staying at a nearby hotel reported hearing gunfire and explosions coming from the direction of the complex, a local resident said it appeared Gadhafi had few resources at his disposal.

Moammar al-Warfali told The Associated Press that he could see only a few government tanks nearby.

"When I climb the stairs and look at it from the roof, I see nothing at Bab al-Aziziya," he said. "NATO has demolished it all and nothing remains."

Despite growing celebrations in Green Square, the symbolic centre of the Gadhafi regime, opposition leaders said the rebels' work is not done.

NATO officials said the air campaign against key Gadhafi targets would continue until all government forces either surrender or leave the streets. The alliance has hammered the capital with at least 40 bombing runs over the past two days, the highest number directed at any one area since the campaign began five months ago.

Libyans who poured into Green Square flashed "V" for victory signs and honked car horns to celebrate what they see as the near end of the Gadhafi regime.

"We came out today to feel a bit of freedom," said Ashraf Halaby, a 30-year-old Tripoli resident. "We still don't believe that this is happening."

Despite the growing optimism, tension hung over other parts of the capital, where stores were closed and barricaded and people stayed in their homes.

At a gas station in the neighbourhood of Gourji, arguments broke out between rebels and locals over who was entitled to first fill up their tanks.

Rebel breakthrough took hours

The startling rebel breakthrough, after a long deadlock in Libya's 6-month-old civil war, resulted from a co-ordinated plan by rebels, NATO and anti-Gadhafi residents inside Tripoli.

Rebel fighters swept in from the west on Sunday, covering 30 kilometres and numerous towns in a matter of hours. They even overwhelmed a major military base and were joined by residents celebrating in the streets.

When rebels reached Tripoli, the special battalion entrusted by Gadhafi with guarding the capital promptly surrendered.

A senior rebel official, Fathi al-Baja, said the battalion surrendered because its commander, whose brother had been executed by Gadhafi years ago, was secretly loyal to the rebellion.

In audio statements released over the weekend, Gadhafi called on loyalists to join the fight against the "rats," but few seemed to take up the challenge and the situation began to appear desperate for Gadhafi.

"Now that you have rebels coming into town in pickup trucks with heavy machine guns that level of support is going to disappear quite quickly and basically their own survival becomes first and foremost," Scott Taylor, editor of Esprit De Corps magazine, said in an interview Monday.

Taylor told CTV's Canada AM that Gadhafi's support base appeared to disintegrate over the weekend, giving new momentum to the rebels.

"I think the key here was the collapse of confidence for the Gadhafi government sometime on Saturday afternoon when they began to realize this was more serious than they had thought," Taylor said, adding that it remains unclear whether Gadhafi is in Tripoli or whether he has fled the country.

However, he said the embattled dictator's vow to fight to the death in Libya suggests he may attempt to go down in a blaze of glory.

"Because of the indictment for him as a war criminal by the international court he can't really flee to too many places and he's made a vow he will stay and fight," Taylor said.

"His heart of support is in the Gadhafi tribal areas, the city of Sirte is his strongest base... he may end up making a last stand there."

‘Impossible he'll surrender'

Gadhafi's former right-hand man, who defected last week to Italy, said the longtime leader would not go easily.

"I think it's impossible that he'll surrender," Abdel-Salam Jalloud said in an interview broadcast on Italian RAI state radio. He added: "He doesn't have the courage, like Hitler, to kill himself."

Jalloud was Gadhafi's closest aide for decades before falling out with the leader in the 1990s. He fled Tripoli on Friday, according to rebels.

In London, British Defence Secretary Liam Fox said the last gasp of resistance is now coming from mercenaries rather than Libyans loyal to Gadhafi.

"There is a certain amount of violence still occurring, we also know that a lot of the resistance from the pro-Gadhafi forces has in fact come from mercenary elements," he told BBC radio.

"It does appear that a lot of the Libyan forces themselves inside Tripoli either stayed at home or put down their arms -- and that may bode well for a diminishing level of violence during the transitional period," he said.

On Monday, Mahmud Nacua, the rebels' top diplomat in London, said opposition forces now control 95 per cent of the capital. Nacua vowed that "the fighters will turn over every stone to find" Gadhafi.

In Tripoli, a rebel commander said reinforcements were arriving in the capital from across Libya.

"Our fighters are coming from all directions and, God willing, today we will liberate the whole city," the commander, Suleiman Sifaw, told The Associated Press.

Meanwhile, government spokesperson Moussa Ibrahim countered that the regime has "thousands and thousands of fighters" who he vowed would travel to Tripoli to fight the rebels.

Alessandro Bruno, editor of The North Africa Journal, said it was inevitable that the rebels would eventually take Tripoli. Gadhafi's capture, he said, is equally inevitable.

"It's going to be very difficult for him to flee the country now because the rebels control the airport and they also control all the main routes out of the country," he told Canada AM.

However, Bruno said Gadhafi's Tripoli compound goes deep underground and will be difficult for rebels to penetrate.

"That's going to be a tough battle simply from an architectural point of view that this is a very big compound with very heavily protected walls."

And if Gadhafi is captured, he said, it's not certain he will make it to court.

"I think Libyans will want their own version of justice," Bruno said.

With files from The Associated Press