France and Italy promised more support for Libya's opposition, saying they would join Britain in sending military advisers to help the rebels break a battlefield stalemate. A rebel spokesman welcomed the advisers as a big help.
France also said it would intensify airstrikes against Libyan military targets after a month of NATO airstrikes has failed to rout Gadhafi's forces.
Libyan Foreign Minister Abdul-Ati al-Obeidi said sending military advisers would worsen the conflict. If NATO attacks stopped, Libya could hold discussions about elections, democracy and constitutional reform, he told the BBC. In comments to The Guardian daily, the minister was more explicit, saying Gadhafi could go as part of reforms.
Discussions on reform could include "whether the leader should stay and in what role, and whether he should retire ... Everything will be on the table," he was quoted as saying.
The U.N's top human rights official, meanwhile, said Libyan government forces may be committing war crimes by using heavy weapons against civilians in the besieged port city of Misrata. Navi Pillay said Gadhafi's troops should be aware that their actions will be scrutinized by the International Criminal Court.
Libyan officials have persistently denied the army is shelling Misrata. "We welcome any objective investigation of the actions of our army, our government and our officials," said government spokesman Moussa Ibrahim. He said the international community should "not listen to media reports or stories fabricated by the rebels."
Fighting in Libya erupted two months ago, when protests against Gadhafi's four decades in power turned into an armed uprising. Rebels now control most of the east, while Gadhafi holds most of the west.
However, there are rebel-held areas in western Libya, including Misrata and the Nafusa mountain area that is home to Libya's Berber minority. The fighting in the mountain region has sent thousands fleeing into nearby Tunisia. Four mortar shells from the fighting landed on Tunisian territory on Monday, Tunisian officials said.
If rebels in western Libya were to rise up across the region, it could break the deadlock that has marked the uprising.
Since the weekend, the Nafusa region town of Yifran, with a population of about 25,000, has come under daily attack with Grad rockets, tank shells and anti-aircraft guns, said a rebel fighter, who would only give his first name, Belgassem, for fear of reprisals.
Belgassem said shelling on Yifran continued throughout the night, briefly stopped before dawn and then resumed in the morning. The rebel fighter said the assault damaged a water tank as well as homes in Yifran. Doctors had to abandon the town's hospital because of the shelling, said Belgassem, speaking by phone from the nearby town of Qalaa.
Qalaa has also come under attack, but there was no shelling Wednesday, Belgassem said. "We are defending our city and they can't get into the center because we are here," he said.
In Nalut, another mountain town near the Tunisian border, rebels fought off Gadhafi loyalists on Monday and pursued them for about 30 kilometers (18 miles), said Ayman, a rebel fighter from Nalut. In clashes Tuesday, the rebels seized weapons and ammunition from Gadhafi's forces, said Ayman, who would not give his last name for fear of repercussions.
He said four rebels were killed in two days of fighting.
International aid officials said more than 10,000 people from the Nafusa mountain area have fled to Tunisia in recent days, avoiding official border crossings manned by Gadhafi loyalists. The refugees stay in camps near the Tunisian border towns of Dehiba and Remada, or are being hosted by Tunisian families.
Firas Kayal, an official with the U.N. refugee agency, said the Libyan border area "has apparently been under heavy fighting and shelling between opposition forces and Gadhafi."
The refugees "enter in the cars, through the mountains, cars filled with luggage and families and women and children and personal items," he said.
Yifran, Qalaa, Nalut and others near the Tunisian borders are inhibited by Berbers who suffered under Gadhafi repressive policies. Gadhafi has dubbed Berbers as 'product of colonialism' created by the west to divide Libya. In the 1970s, members of pan-Berber associations were arrested and Berber activities were banned.
New clashes erupted Wednesday in the other rebel outpost in western Libya, the city of Misrata.
Exchanges of fire were heard between Libyan troops and armed residents in the city center. NATO planes flew overhead, but did not carry out airstrikes. Snipers opened fire from rooftops, said Abdel Salam, a rebel fighter who wanted to be identified only by his given name for fear of reprisal.
The rebels control the port area, while Gadhafi's forces have deployed along Tripoli Street, a downtown thoroughfare.
Misrata has been under siege for nearly two months. In recent days, Gadhafi's forces have intensified their assault on the city, firing tank shells and rockets into residential areas, according to witnesses and human rights groups.
Pillay, the U.N. human rights commissioner, urged Libyan authorities to halt their siege of the city and allow medical care to reach victims. Pillay says it is "clear that the numbers (of casualties) are now substantial, and that the dead include women and children."
Hundreds of migrant workers and wounded people have been evacuated by boats, which have also delivered humanitarian supplies, including food and medicine.
The rebels received a boost when Italy and France announced they are joining Britain in sending military advisers to help organize the opposition forces. Many of the rebels have had little battle experience or military training.
National Transition Council spokesman Mustafa Gheirani said the military advisers would be a big help since the rebels lack the organization necessary to take on Gadhafi's forces.
"My understanding is that it will all be administrative help, nothing with weapons and nothing in the field," Gheirani said.
The rebels have repeatedly said they do not want foreign troops on the ground. Asked how the acceptance of foreign military advisers conformed with that view, Gheirani said a few officers differed from having thousands of foreign troops squaring off against Gadhafi's forces.
"Even foreign troops who are going to protect humanitarian aid to reach a certain area might be acceptable depending on the conditions," said Gheirani.
The announcements came after a representative of the rebels' transitional government met with French and Italian leaders. The French Foreign Ministry said it already has military liaison officers on the ground in the rebel-held city of Benghazi. The officers are trying to help the rebels organize and bolster the NATO air campaign that has failed to rout Gadhafi's military.
The Obama administration has decided to give the opposition $25 million in non-lethal assistance, for vehicles and medical and communications equipment to help protect civilians, according to U.S. officials, who spoke on condition of anonymity because they were not authorized to speak publicly about the aid, which was first reported by The Washington Times.
Associated Press writer Angela Charlton and Sylvie Corbet in Paris, Alessandra Rizzo in Rome, Slobodan Lekic in Brussels and Karel Janicek in Prague and Maggie Michael in Cairo contributed reporting.