Libyan leader Moammar Gadhafi's troops shelled rebel forces in the eastern city of Ajdabiya on Sunday, forcing the rebels to retreat.
Some reports claimed rebels had gained control over Ajdabiya, but government forces continued shelling the rebels.
On Saturday, rebel forces had advanced to the outskirts of Brega, an oil port town 60 miles to the west.
Dozens of vehicles -- some with machine guns mounted in the back -- were seen fleeing Ajdabiya for Benghazi, the rebel sronghold about 100 miles to the north, The Associated Press reported.
Rebel forces reclaimed the town last month with the help of NATO air strikes, which targeted Ghadafi's tanks, armored personnel carriers and heavy artillery that had surrounded the town.
NATO air strikes on Gadhafi's troops have kept rebel forces fighting, though unable to push through to Sirte, the Libyan leader's hometown and key to the western part of the country.
French Defense Minister Gerard Longuet said NATO air strikes are hampered by a lack of "concrete and verifiable information" on the ground.
"There is no lack of planes but a lack of identification of mobile objectives," the French daily, Le Parisien, quoted Longuet as saying.
"Coalition aviation is capable of breaking all logistical provisions of Gadhafi's troops," he said, adding that "if the aviation avoids tragedies, it still isn't solving the problem."
Last week in Berlin, NATO Secretary-General Anders Fogh Rasmussen said the forces needed "a small number of precision aircraft" for effective air strikes against Gadhafi's troops.
"I'm hopeful that nations will step up to the place," Rasmussen reportedly said, in view of the changing situation on the ground.
AP contributed to this report.