Last Updated 12:51 p.m. ET
ZAWIYA, Libya - Anti-government forces backed by rebel army troops are in control of the city closest to the capital Tripoli.
An Associated Press reporter who arrived Sunday in Zawiya, 30 miles west of Tripoli, says forces loyal to longtime ruler Muammar Qaddafi are surrounding the city of 200,000.
But anti-government rebels and troops allied with them are in control of the city center.
Police stations and government offices have been torched and anti-Qaddafi graffiti is everywhere. Many buildings in the city are pockmarked by bullet holes.
"Qaddafi Out," chanted hundreds in the city center, where army tanks controlled by rebels are deployed.
The rebels now control several Libyan cities.
The Libyan people have turned on Muammar Qaddafi, yet he vows to die fighting rather than release his 42-year grip on power. CBS News correspondent Kelly Cobiella reports that armed militias have been sent out by the regime to patrol the streets of the capital.
Anti-government demonstrators are burying their neighbors, killed - they say - by Qaddafi's gunmen.
"This is not our government!" said one resident at a funeral. "To kill ... these are humans, these are our neighbors, our brothers!"
Qaddafi's enemies are creeping East. They control land from the Egyptian border through Benghazi, all the way to the town of Sert where they're being held back by hard-core loyalists from Qaddafi's tribe.
The opposition also claims to have flanked Tripoli to the West, taking the key town of Zawiyah, 30 miles from the capital, though the government disputes that.
There were at least six checkpoints controlled by troops loyal to Qaddafi on the road from Tripoli to Zawiya. Each checkpoint was reinforced by at least one tank, and the troops concealed their faces with scarves.
"To us, Qaddafi is the Dracula of Libya," said Wael al-Oraibi, an army officer at Zawiya who joined the rebels. He said his decision to defect was prompted in large part by the Libyan leader's use of mercenaries from sub-Saharan Africa against the people of Zawiya.
Meanwhile, cities in eastern Libya under the control of rebels have appointed a former minister to lead a provisional government, officials in Benghazi, Libya's second largest city in the east, said Sunday. But a spokesman for the new government, Abdel-Hafidh Ghoga, denied that former justice minister Mustafa Abdel-Jalil was named its leader.
In other developments:
Speaking in Cairo today, Senator John McCain and Joe Lieberman said the U.S. should arm Libyan rebels and recognize a provisional government being formed in the eastern part of the country, which has been dubbed by some "Free Libya." Traveling to Geneva, Secretary of State Hillary Clinton also said today that the U.S. is "reaching out" to Libyans who are tryijng to put together a post-Qaddafi government.
In an interview with CNN's Christiane Amanpour, Muammar Qaddafi's son, Saif Qaddafi, denied that the regime is killing civilians. "Show me a single attack, show me a single bomb," he told her. "The Libyan air force destroyed just the ammunition sites. That's it."
"The whole south is calm. The west is calm. The middle is calm. Even part of the east," he said.
He also rejected President Obama's call for his father to step down. "It's not an American business," he said.
Saif's brother, Saadi Qaddafi, warned of "civil war" in Libya if Muammar Qaddafi were to let go of power, and said the massive protests affecting the country would, like a "fever," spread everywhere. "That is my personal opinion, and the chaos will be everywhere," he told Amanpour. "They think it's about freedom. I love freedom, you love freedom. But it's powerful, this earthquake. No one can control it."
The U.N. Security Council voted Saturday night to impose sanctions on Qaddafi and his five children and associates. The council also agreed to freeze Qaddafi's assets, and to ban travel by his family.
President Obama said yesterday that Qaddafi has lost the legitimacy of his rule - and now needs to do what's right for his country: Leave office.
A new video posted on the Internet (which could not be independently verified) appeared to show two Libyans being held to the ground by armed men, then shot by what the social media website said were snipers belonging to Qaddafi's militia. The website said the video was shot on Friday in an unknown location in Libya.
The German air force evacuated 132 people from the Libyan desert in a secret military mission, the country's foreign minister said Sunday. Two military planes landed Saturday on a private runway belonging to the Wintershall AG company and evacuated 22 Germans and 112 others, Foreign Minister Guido Westerwelle said in Berlin.
Two RAF planes landed on Malta carrying 150 Britons rescued from Libya in what the U.K. media is branding a "daring and dramatic" operation. Ferries trying to leave Tripoli have been delayed by bureaucracy and rough seas.
The United Nation's High Commissioner for Refugees says more than 100,000 people have fled violence in Libya to neighboring countries in the past week. Approximately 55,000 people have arrived in Egypt since Feb. 19. About 7,000 of those are third-country nationals, mostly from Asia. A further 50,000 people (including 2,000 Chinese and 2,500 Libyans) have crossed into Tunisia.
UNHCR said Sunday that it has airlifted 100 metric tons of aid, including 2,000 tents, to Jerba in Tunisia from where it will be transported to the Libyan border.
"Zawiya in our hands"
A key city close to an oil port and refineries, Zawiya is the nearest population center to Tripoli to fall into the opposition hands. Police stations and government offices inside the city have been torched and anti-Qaddafi graffiti was everywhere. Many buildings are pockmarked by bullets.
The mood in the city was generally upbeat, but the anticipation of a renewed attempt to retake the city was causing some anxiety among the rebels.
On the outskirts of the city, they are surrounded by pro-Qaddafi forces, also backed by tanks and anti-aircraft guns.
"Qaddafi Out," chanted hundreds in Zawiya's city center on Sunday. The charred skeletons of many cars littered the city and most streets were blocked by palm tree trunks or metal barricades. "Free, Free Libya," chanted members of the anti-government forces at the city center.
"Down with Qaddafi, the mass murderer," read graffiti scrawled in the city. An effigy of Qaddafi hung from a light pole in the city's main square. On its chest the words "Execute Qaddafi" were emblazoned.
The square has now become the burial place of six of 11 rebels killed by pro-Qaddafi forces Thursday when they attacked the area to try and dislodge them. Residents reported several skirmishes between the two sides since Thursday.
"We are all wanted," said one rebel at the square who did not want to give his name for fear of reprisals. "Zawiya in our hands is a direct threat to Tripoli."
Rebels from the town and army forces who defected from the regime to join them largely consolidated control of the town on Feb. 24, after an army unit that remained loyal to Qaddafi opened fire on a mosque where residents some armed with hunting rifles for protection had been holding a sit-in.
About 20 miles west of Zawiya, some 3,000 pro-Qaddafi demonstrators gathered on the coastal highway, chanting slogans in support of the Libyan leader.
Before Zawiya fell to rebel forces, Qaddafi scolded the city residents on Thursday.
"Shame on you, people of Zawiya. Control your children," he said. "They are loyal to bin Laden," he said of those involved in the uprising. "What do you have to do with bin Laden, people of Zawiya? They are exploiting young people ... I insist it is bin Laden."
On Feb. 24, local forces repelled an attempt by militiamen and pro-Qaddafi troops to take back the town.
Later, Qaddafi's son, Seif al-Islam, acknowledged to foreign journalists in Tripoli that there were "two minor problems" in Misrata and Zawiya. There, he said, "we are dealing with terrorist people," but he hoped to reach a peaceful settlement with them.
In Tripoli , home to a third of Libya's six million people, Qaddafi loyalists remain in control. It was quiet Sunday, with most stores closed and long lines outside the few banks open for business.
City residents thronged the banks after state TV and SMS messages announced in the past few days that each family would receive 500 Libyan dinars (about $400), plus the equivalent of about $100 credit for phone service. State TV said families also will be entitled to 60,000 Libyan dinars (about $49,000) in interest-free loans to buy apartments.
At one of the checkpoints into the city, as soon as Cobiella's news crew arrived, guards stopped checking cars, and drivers began honking and cheering for Qaddafi (and our camera).
Today, text messages went out telling Libyans to check their bank accounts for a $400 gift from a government trying to buy their loyalty.
Everyone we meet in Tripoli, Cobiella says, tells us they love their leader. Whether that affection is real, or driven by fear, is hard to tell. But the fate of Muammar Qaddafi and his country depends on it.
But one resident said Tripoli's calm may be deceptive.
"The situation is being constructed to look natural, but it is not," said a 40-year-old Tripoli businessman who did not want to be named for fear of reprisals. "People are scared and they are waiting for the fall of the regime. People are scared to go out or to gather because some areas have been taken over by armed groups loyal to the regime."
Another Tripoli resident, a 21-year-old Libyan-American who only wanted to be identified by her first name, Rahma, said the city was deserted on Sunday. "No one is driving around, no one is out in the streets."
Her aunt, she said, went to a funeral Sunday and came back to tell the rest of the family that there were checkpoints run by pro-regime forces across the city.
A doctor in Libya's third-largest city Misrata, 125 miles east of Tripoli, said residents retrieved two more bodies of those killed during fighting with pro-Qaddafi forces near the city's air base on Friday.
The two bodies raise to 27 the death toll from the fighting. About 30 residents who took part in the battle remain unaccounted for, said the doctor who spoke on condition of anonymity because he feared reprisals.