Rebel fighters sit near a road sign reading Tripoli after taking partial control of the coastal town of Zawiyah
Rebel fighters wait at a checkpoint near a sign pointing to Tripoli in the coastal town of Zawiyah, 50 km (30 miles) west of Tripoli, August 14, 2011. Libyan rebels hoisted their flag in the centre of the town near the capital on Sunday after the most dramatic advance in months cut off Muammar Gaddafi's capital from its main link to the outside world.

Could the rebels really be on their way to Tripoli? According to their spokesperson, the Libyan rebels have seized a second strategic town near Tripoli and are now encircling the capital.

They have tried to approach the Libyan capital, Moammar Gadhafi's stronghold, since the beginning of the conflict, six months ago.

However as news of the rebel advances emerged, Gadhafi loyalists showed they have not yet given up the fight as a U.S. defence official also said Monday they had fired a Scud missile for the first time since the uprising.

According to reports, the missile was fired on Sunday morning from a location about 80 kilometres east of Sirte, Gadhafi's home town in which he still has many supporters.

The missile however reportedly landed in the desert, east of the coastal oil town of Brega and no casualties were reported, leaving many to question what the target was.

For weeks the rebels and the coalition forces have insisted the National Transitional Council's forces would be able to march to Tripoli within weeks, and it seems that this time, the battle is heating up.

An audio message by Gadhafi was broadcast to his supporters and the leader called on his followers to fight rebels he referred to as "rats."

The leader's forces also launched a counter attack on the town of Zawiyah a day after rebels captured it, firing mortars and rockets in an attempt to push back the rebels.

Zawiyah is a strategically located city, as it links Tripoli to the Tunisian border but Reuters reported that Gadhafi's forces still hold an oil refinery and have sniper positions on rooftops in the town, while confirming that the highway linking Tripoli to the Tunisian border is shut.

Rebels have also said they had captured the town of Garyan south of Tripoli on Monday but this information has until now not been verified.

"Garyan is fully in the hands of the revolutionaries," a rebel spokesman, Abdul-Rahman, said by telephone.

"Gadhafi has been isolated. He has been cut off from the outside world."

However contradicting Abdul-Rahman, Government spokesman Moussa Ibrahim who was speaking on state television, said Gadhafi forces were trying to oust armed gangs in Garyan. "There are still armed gangs inside the city. We are able to drive them out," he said.

As the conflict intensifies, a U.N. envoy arrived in neighbouring Tunisia, with sources claiming rebels and representatives of the government have been holed up on the island resort of Djerba for negotiations. The envoy, Abdel Elah al-Khatib, told Reuters he would meet "Libyan personalities residing in Tunisia" to discuss the conflict.

Talks between the two camps have been reported for months but often denied by one of the camps and on Monday the Libyan government denied such talks are taking place. A spokesman dismissed reports of negotiations about the Libyan leader's future as part of a "media war" against him.

"The leader is here in Libya, fighting for the freedom of our nation. He will not leave Libya," spokesman Ibrahim said.

Analysts have pointed out that despite their new advance the rebels are still in no position to take Tripoli as many in the city still support Gadhafi. On the other hand, by encircling the city, the rebels say they hope to force the collapse of the Libyan government or push for a popular uprising against the leader, which will not be easy.

Their will to try and negotiate with the Gadhafi camp, something they were opposed to in the beginning of the conflict suggests that they still lack manpower and resources. Moreover, launching an assault on Tripoli could put many civilian lives at risk confirming that despite the rebels' new territorial gains, the conflict it seems is not yet over.