Gadhafi appeared to be keeping up the momentum he has seized in recent days in his fight against rebels trying to move on the capital, Tripoli, from territory they hold in eastern Libya.
Gadhafi's successes have left Western powers struggling to come up with a plan to support the rebels without becomg ensnared in the complex and fast-moving conflict.
President Barack Obama's most senior advisers were meeting Wednesday to outline what steps are realistic and possible to pressure Gadhafi to halt the violence and give up power.
They planned to examine the ramifications of a no-fly zone over Libya and other potential military options, U.S. officials said, speaking on condition of anonymity to discuss internal administration deliberations.
Britain and France are pushing for the U.N. to create a no-fly zone over the country, and while the U.S. may be persuaded to sign on, such a move is unlikely to win the backing of veto-wielding Security Council members Russia and China, which traditionally object to such steps as infringements on national sovereignty.
The two sides in Libya traded barrages of artillery shells and rockets Wednesday afternoon about 12 miles (20 kilometers)west of the oil port of Ras Lanouf, an indication that regime forces were much closer than previously known to that city. Ras Lanouf is the westernmost point seized by rebels moving along the country's main highway on the Mediterranean coast.
Warplanes streaked overhead and a yellow fireball erupted at or near the location of a small oil terminal. Pillars of black smoke also rose from the direction of the town of Bin Jawwad, about 40 miles to the west.
Rebels also hold territory south of Tripoli and homes and other building in the city of Zawiya were shelled Wednesday by government forces, a resident of the nearby town of Sabratha told The Associated Press by telephone.
A Sky News correspondent in Zawiya showed rebel-controlled tanks and vehicles mounted with machine guns, in the city's main square, and said pro-Gadhafi forces at the city's edge were fire constantly at moving vehicles, including ambulances and civilian cars.
In Cairo, a Egyptian army official told The Associated Press on condition of anonymity that Maj. Gen Abdul-Rahman bin Ali al-Saiid al-Zawi, the head of Libya's logistics and supply authority, was asking to meet Egypt's military rulers.
There have been no public contacts between the Libyan regime and Egypt's ruling generals since the Libyan uprising broke out on Feb. 15, and there have been no known government-related flights during that time.
Gadhafi said in a Turkish television interview that Libyans would fight back if Western nations imposed a no-fly zone to prevent his regime from using its air force to bomb government opponents staging a rebellion.
He said imposing the restrictions would prove the West's real intention was to seize his country's oil wealth.
"Such a situation would be useful," Gadhafi said. "The Libyan people would understand their real aims to take Libya under their control, to take their freedoms and to take their oil and all Libyan people will take up arms and fight."
Gadhafi spoke with Turkey's state-run TRT Turk television late Tuesday after a surprise appearance at a hotel where foreign journalists are staying in Tripoli.
In separate remarks, he called on Libyans in the rebel-held east of the country to take back control from the opposition leaders who have seized the territory.
Forces loyal to the Libyan leader have been fighting rebels in the east as well as in a handful of towns close to the capital Tripoli, where he has total control.
In the interview, Gadhafi was responding to U.S. and British plans for action against his regime, including imposing a no-fly zone to prevent Gadhafi's warplanes from striking rebels.
Gadhafi claimed such a move would lead Libyans to understand that the foreigners' aim was to seize oil and take their freedom away. If that happened, he said, he "Libyans will take up arms and fight."
Libyan state television also broadcast remarks by Gadhafi addressing a group of youths from the town of Zintan, 75 miles (120 kilometers) southwest of Tripoli. Gadhafi again blamed al-Qaida operatives from Egypt, Algeria, Afghanistan and the Palestinian territories for the turmoil roiling his country since Feb. 15.
State television broadcast Gadhafi's address early on Wednesday, but did not say when the Libyan leader had spoken.
Gadhafi has been in power since 1969, when he led a military coup that topple the monarchy.
In the TRT Turk interview, Gadhafi said there were no legitimate grounds for a foreign intervention in his country, insisting that Libya was only fighting al-Qaida as in Afghanistan or Pakistan.
"If al-Qaida seizes Libya, that will amount to a huge disaster," Gadhafi said. "If they (al-Qaida fighters) take this place over, the whole region, including Israel, will be dragged into chaos. Then, (al-Qaida leader Osama) Bin Laden may seize all of north Africa that faces Europe."
Michael reported from Tripoli. Bradley Klapper and Matthew Lee in Washington and Derek Gatopoulos in Athens contributed to this report.