Tripoli: Rebel forces began to purge Tripoli’s streets of diehard gunmen still loyal to fugitive Moammar Gadhafi on Thursday in the final phase of the battle for the Libyan capital.

As a volley of shell fire broke the morning calm in Tripoli, rebels said they were confident they could mop up soldiers clinging to a leader now on the run and presumed to be in hiding in the country he ruled for four decades.

“The end will only come when he’s captured, dead or alive," said Mustafa Abdel Jalil, head of the rebel National Transitional Council (NTC), who offered amnesty to any of Gadhafi’s entourage who killed him and announced a reward worth more than $1 million for his capture.

After rebel forces overran Gadhafi’s fortified Tripoli compound and trashed symbols of his 42-year rule, scattered loyalist fighters and snipers fought last-ditch battles in pockets across the city. Rebels also reported fighting deep in the desert and a standoff around Gadhafi’s home town.

“There are still many snipers in eastern Tripoli," said one rebel fighter. “We’ll finish them off, but it’ll take time."

In a clearing by the seafront in Tripoli, at least 100 rebel trucks mounted with machineguns were parked, their crews checking their weapons in preparation for an assault on Gadhafi hold-outs in the leader’s huge Tripoli stronghold overrun by rebels at the weekend.

“Gadhafi is finished," said one fighter, who had driven into Tripoli from the rebel city of Misrata.

There was no clear indication of Gadhafi’s whereabouts, though his opponents surmised he was still in or around Tripoli after what Gadhafi himself described as a “tactical" withdrawal from his Bab al-Aziziya compound before it fell on Tuesday.

French magazine Paris Match quoted an intelligence source saying Libyan commandos found evidence that he had stayed at a safe house which they raided on Wednesday. NATO was helping the rebels with intelligence and reconnaissance, Britain said, and its jets kept up their bombing campaign overnight.

“There are areas of resistance by the regime which has had considerable levels of military expertise, still has stockpiles of weapons and still has the ability for command and control," British defence minister Liam Fox told Sky News.

“They may take some time to completely eliminate and it is likely there will be some frustrating days ahead before the Libyan people are completely free of the Gadhafi legacy."

Hospitals filled with wounded

Aymen, a rebel at the Mitiga airbase in Tripoli, said rebels were trying to fight their way into the Abu Slim area, not far from Gadhafi’s Bab al-Aziziya complex.

“They are surrounding it but Gadhafi loyalists are putting up a fight, firing from inside. We continue to comb for supporters of the fallen regime," he said by phone.

Nouri Echtiwi, a rebel spokesman in Tripoli, said rebels had released several hundred detainees from a prison in Abu Slim. The figure can not be immediately verified.

Gadhafi’s home town of Sirte, on the coast between Tripoli and Benghazi, was still not in the hands of the new leadership who have despatched forces there.

“Talks have been ongoing for two days now between NTC and tribal leaders from Sirte to liberate the city and ensure its inhabitants lay down arms and allow access to administrative buildings," Echtiwi said.

Rebels also reported fighting in the southern city of Sabha.

But medical supplies, never especially plentiful, were reaching critical levels in many places where some of the hundreds of casualties from the fighting were being treated. Shooting in the street also kept medics away from work.

“The hospitals that I’ve been to have been full of wounded - gunshot wounded," said Jonathan Whittall, head of the Medecins Sans Frontieres (MSF) mission to Libya.

“In one health facility that I visited, they had converted some houses next to the clinic into an inpatient department ... But because of the shortage of staff, there was no nursing staff and the patients were essentially caring for themselves."

A British medical worker said one Tripoli hospital had received 17 bodies which appeared to be of civilians executed in recent days by government forces in Gadhafi’s compound.

Meanwhile Libya’s new masters are keen to forge ahead and secure the funds they need to bring relief to war-battered towns and rebuild the oil sector on which the economy depends. NTC diplomats meet their Western backers in Turkey on Thursday.

Western leaders and the rebel government-in-waiting have lost no time readying a handover of Libya’s substantial foreign assets.

After talks with Arab and Western allies in Qatar on Wednesday, a senior rebel leader said the NTC would seek to have $5 billion in frozen assets released to jump-start the economy and provide vital relief to its citizens. The amount is double the previously given estimate of $2.5 billion.

The United States has also submitted a draft resolution to the UN Security Council to unfreeze $1.5 billion in Libyan assets. No vote was held on the draft on Wednesday, but diplomats said a vote could come on Thursday or Friday.

While Libya is rich in oil, four decades of rule by personality cult has left it with few normal institutions.

“DIrty bomb"

After meeting rebel government chief Mahmoud Jibril in Paris, French President Nicolas Sarkozy, who took a lead in pushing for NATO military intervention, said Paris would host a “Friends of Libya" summit on 1 September.

It would include Russia and China, both critics of the Western bombing campaign, who have been concerned at now losing out on business deals with the rebels. Rebels want to bring back workers to restart oil export facilities soon.

The rebels, many of whom were once supporters of Gadhafi, have stressed the wish to work with former loyalists and officials and to avoid the purges of the ousted ruling elite which marked Iraq’s descent into sectarian anarchy after 2003.

Their gains are however no guarantee of security or progress with Gadhafi and his entourage at large. Abdel Salam Jalloud, a close ally who switched sides last week, said Gadhafi planned to slip away and launch a guerrilla war:

“He is sick with power," he said. “He believes he can gather his supporters and carry out attacks ... He is delusional. He thinks he can return to power."

There were signs of more supporters giving up on him, following a stream of defections during the six months of the uprising.

The second in command of Libya’s intelligence services and the health minister declared their allegiance to rebel forces.

After by far the bloodiest of the Arab Spring revolts that are transforming the Middle East and North Africa, there were clear indications of new threats of disorder. Four Italian journalists have been kidnapped near Zawiya, between Tripoli and the Tunisian border.

Western officials also fear anti-aircraft missiles and nuclear material capable of making a “dirty bomb", could be taken from Gadhafi’s stocks and reach hostile groups.

Imposing order and preventing rivalries breaking out across tribal, ethnic and ideological lines among the disparate rebel factions are major concerns of both the new leaders and of their Western backers, who are working to avoid the anarchy and bloodshed that followed the overthrow of Iraq’s Saddam Hussein.