Libyan dictator Colonel Muammar Gaddafi has promised victory during a live public appearance - amid reports his forces were terrorising civilians.
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The country's leader of 41 years labelled his international opponents "fascists", calling the conflict an "historic battle" against "unjust aggression".
US President Barack Obama has ruled out a land invasion of Libya.
But the American military warned it was considering all options in response to dire conditions for residents of the coastal area of Misratah.
People there say they have been left cowering in darkened homes and scrounging for food and rainwater.
A doctor, speaking on condition of anonymity for fear of reprisals if the city falls to Col Gaddafi's troops, said tanks had opened fire on a peaceful protest.
"The number of dead are too many for our hospital to handle," he said.
"As for food, we share what we find and if we don't find anything, which happens, we don't know what to do."
But in another bellicose plea, Col Gaddafi told a cheering crowd at the battle-scarred Azizia Palace that their country was "ready for this battle, be it long or short".
"All those free should take part in this battle," he said.
"Those that are against you are just a handful of crazed people, a handful of Fascists."
Sky foreign correspondent Lisa Holland, reporting under the supervision of the Libyan authorities in Tripoli said: "This is a big, sprawling complex and it took a direct missile hit two nights ago."
But with confusion over allied war aims since the UN-backed no-fly zone implementation began last Saturday, a period of intransigence with the dictator may be under way.
"We may be in for a sustained period of this kind of stalemate," Holland said.
US secretary of state Hillary Clinton hinted the Gaddafi family may be exploring options for exile.
The US also admitted its Harrier jets fired bombs at suspected enemies during the rescue mission to extract two American airmen after their Suffolk-based fighter crashed in Libya.
American military chiefs said the jet - which is normally based at RAF Lakenheath near Cambridge - is thought to have suffered mechanical failure while in rebel-held territory.
The mercy mission commenced after the pilot and weapons officer of the F-15E Strike Eagle landed in different areas, suffering minor injuries, after ejecting from their plane.
Meanwhile, Libya's capital Tripoli was attacked by coalition forces for a fourth night, with anti-aircraft tracer fire shooting into the night sky.
The attack occurred just hours before the Libyan dictator appeared in front of the cheering crowd.
But after days of confusion over strategic aims and tactical rules to maintain a no-fly zone amid questions over targeting of the Libyan leader, US President Barack Obama admitted there is still no unified allied voice.
"I would expect that over the next several days we will have clarity and a meeting of the minds of all those who are participating in the process," Mr Obama said.
He spoke as Nato ambassadors in Brussels were unable to reach an agreement, partly because not all 28 member states support the military action and also because the alliance was founded on being a defensive organisation only.
French officials have come up with a plan for a non-Nato supervening political committee to take control, with Arab participation.
French president Nicolas Sarkozy and Prime Minister David Cameron had all agreed in telephone calls that Nato should play a "key role" in the future command structure.
The stated purpose of the airstrikes is to stop Col Gaddafi's troops from attacking rebel cities - in line with the UN mandate to protect civilians, as part of Security Council resolution 1973.
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