Transitional Libyan forces with heavy guns mounted on 100 vehicles swept into Sirte on Saturday in one of the biggest assaults in the battle for Muammar Gaddafi's hometown, but had to seek cover when they drew withering fire from his diehard loyalists.

Fighters with the National Transitional Council (NTC) shouted 'Allahu Akbar!' or 'God is greatest!' as their pickup trucks set off. They pushed into a residential district on the southern side of the Mediterranean coastal city.

But they were forced to scramble for refuge under heavy fire from pro-Gaddafi fighters in an apartment complex, a Reuters reporter on the scene reported. Two NTC fighters were killed and three wounded in the exchanges.

'They're fighting us fiercely because, for sure, Mo'tassim is inside (Sirte),' said Abdulrazaq Haroun, one of the NTC commanders in the city. He was referring to one of Gaddafi's fugitive sons, who has been spotted in Sirte.

Taking Sirte would bring Libya's new rulers closer to their goal of establishing control of the entire country almost two months after they seized the capital Tripoli, but they are also under pressure to spare the civilians trapped inside.

The NTC forces have thrust Gaddafi loyalists back from defensive positions well outside Sirte, and are now contesting control of the centre of the city in often-chaotic street-by-street battles.

The prolonged struggle to capture the few remaining bastions of pro-Gaddafi loyalists has sidetracked NTC efforts to set up effective government over the sprawling North African country and rebuild oil production vital to its economy.

Thousands of civilians have fled Sirte as fighting has intensified, describing increasingly desperate conditions for those inside the seafront city.

More were leaving Sirte on Saturday. 'We could not understand who was firing,' said Milad Abdul Rahim, who was heading out of Sirte. 'It is just random.'

Hassan Massoud drove out of the city in a pick-up truck with his family in the cab and luggage teetering on the back. He said he decided to leave after his neighbour's house was hit.

'It was single-storey. It collapsed on them. It killed a man and a girl,' he said.

Along with the interior desert town of Bani Walid, Sirte is one of the last redoubts of Gaddafi loyalists in the country he ruled alone for 42 years.

It presents a particular challenge for Libya's new rulers. A drawn-out battle with many civilian casualties will breed hostility that will make it very difficult for the NTC to unite the country once the fighting is over.

The senior UN official in Libya, Ian Martin, appealed to NTC fighters on Friday not to aggravate those tensions by exacting violent revenge against Gaddafi supporters in Sirte.

'We are expressing our concern that the situation ends in a way that lays the foundations for national reconciliation rather than exacerbates the problems that a new government will face,' Martin told Reuters in an interview.

Anti-sniper tactics

The start of Saturday's offensive was delayed by a sandstorm that engulfed Sirte, reducing visibility to about 200 metres (yards).

NTC fighters said that pro-Gaddafi forces controlled the Ouagadougou conference centre -- where the deposed leader used to host Arab and African heads of state at sumptuous summits -- and the university and hospital.

They said they were using these buildings to direct sniper and mortar fire at the attacking NTC forces.

One anti-Gaddafi fighter said that instead of sending in men on foot to locate the snipers, they were now identifying their firing positions from a distance and blasting the buildings where they were hiding with heavy weapons.

'What made us tired is the snipers,' said the fighter, Abdelsalam Al-Rishy. 'We're now using RPGs (rocket-propelled grenades) to deal with the snipers.'

NTC officials say they believe Muammar Gaddafi himself is not in Sirte but far to the south in the Sahara desert.

In his first sign of life in weeks, a Syrian-based television station this week broadcast an audio recording of Gaddafi calling on his supporters to rise up in their millions against the new government and their Western allies.-Reuters