Rebel fighters started closing in on one of Moammar Gadhafi's last strongholds on Saturday, after Libya's opposition leader said that rebel forces will lay siege to cities loyal to the ousted dictator.

The rebels are within 10 kilometres of Bani Walid, a town which sits between Tripoli and Gadhafi's hometown of Sirte.

Rebel officials said they encountered little resistance and are trying to persuade tribal elders in Bani Walid to surrender without a fight. The officials said the town has until Sunday to surrender.

"If they don't raise the rebel flag tomorrow, we will enter with force," said Abdel Razak al-Nathori, who commands one of the brigades advancing on the town.

Adbel-Baset Naama, a rebel official, said that anti-Gadhafi fighters also moved closer to the town from the west. Rebel forces from various area towns are gathering along the approaches to Bani Walid, Naama added. He also said they have cut off access to the town in three directions.

Earlier on Saturday, Mustafa Abdul-Jalil, the head of the National Transitional Council, told reporters that his military forces will be poised to attack Bani Walid, Sirte, Jufra and Sabha.

"We are by the grace of God in a position of strength, capable of entering any city, to deploy any of our fighters in any direction," he said.

"However, in our desire to avoid bloodshed and to avoid more destruction to public properties and national institutions, we have given an ultimatum of one week to the areas of Sirte, Bani Walid, Jufra and Sabha."

Gen. Omar al-Hariri, a rebel military commander, suggested on Friday that Gadhafi might either be in a suburb of Tripoli or in Bani Walid. He also acknowledged that the former Libyan leader probably has hideouts elsewhere.

With files from The Associated Press