Speaking from Benghazi, a local man named Benali, told Sky News that members of the Libya's armed forces have defected and that anti-regime protesters are now in control of the city.
Habib al-Obaidi, who heads the intensive care unit at the main Al-Jalae hospital, appeared to confirm the reports, saying the "Thunderbolt" squad arrived at the hospital with soldiers who had been injured in clashes with Gaddafi's men.
"They are now saying that they have overpowered the Praetorian Guard and that they have joined the people's revolt," said Mr al-Obaidi.
The doctor also confirmed the hospital had received the bodies of at least 50 people killed in clashes on Sunday afternoon.
Most had died of bullet wounds and another 100 others were admitted with serious injuries.
The news of further deaths comes as Libya's representative to the Arab League tendered his resignation in protest to "oppression against protesters".
At least 200 people have been killed in four days of anti-government protests, the most serious against Colonel Gaddafi since he came to power 41 years ago.
However, it has been a confusing picture in Libya as foreign journalists are banned from the country.
Furthermore, telecommunications have been interrupted and the internet cut off.
The FCO has advised against all but non-essential travel to Libya and is helping British nationals to leave the country.
The United States has said it is "gravely concerned" by "credible reports" that hundreds of people had been injured or killed in a government crackdown, including reports that troops have fired machine guns at crowds.
There was also widespread speculation within Libya that the regime had hired African mercenaries to suppress any anti-government action.
One doctor in Benghazi was quoted as saying his hospital has counted at least 200 dead since the unrest began.
Separately, a hospital worker in the city named Abdullah told Sky News: "(On Saturday) we had a heavy attack - gunshots by the army forces, especially at night.
"People were protesting... the forces just attacked to make them leave."
A video posted on the internet on Saturday night apparently shows protesters in Benghazi being fired on - but it is unclear whether those shooting are Libyan troops.
A resident of the city, Mary, also told Sky News there had been a fierce confrontation between protesters and the military on Saturday evening.
"There was artillery fire back at young boys who were protesting infront of a big military compound where Colonel Gaddafi usually lives when he's here," she said.
"The boys are trying to take this from the army but I don't think they'll have any chance because of the heavy artillery they're using against them."
It followed reports that said snipers opened fire on a crowd of mourners during the day who had gathered to bury those killed in earlier protests.
Resident Mary said there was another demonstration infront of Benghazi's courthouse on Sunday.
"There was 50 bodies taken for burial from the courthouse and I heard they were travelling to the funeral procession and there was very heavy gunfire," she said.
"I don't know if they were firing at them (the mourners), but it seemed like it."
Separate reports backed her comments, indicating Libyan forces had again opened fire on mourners on Sunday.
Britian's Foreign Secretary William Hague has condemned the violence unleashed by Colonel Gaddafi.
He told Sky's Murnaghan programme: "It is such a closed society to the international media, nevertheless the world is watching.
"The United Kingdom condems what the Libyan government has been doing and how they have responded to these protests.
"What Colonel Gaddafi should be doing is respecting basic human rights and there is no sign of that in the dreadful response, the horrifying response, of the Libyan authorities to these protests."
He later phoned Colonel Gaddafi's son Saif to express his "grave concern" about the deteriorating situation in Libya.
In London on Sunday, demonstrators also gathered outside the Libyan embassy, with some telling Sky News they had lost loved ones in the Benghazi violence.
Elsewhere, the EU presidency said it has been warned by Libya to stop "encouraging" the protests - otherwise Tripoli will "suspend co-operation" in the fight against illegal immigration.
Also, the Arabic newschannel Al Jazeera claims its signal across the Middle East and North Africa is being jammed, with Libya being named as the prime suspect.
Libya is divided down sectarian lines - Colonel Gaddafi draws his main support from the western regions.
In the east there is an opposing tribe to that of the Libyan leader and there have been unrest in Benghazi before.
Over the past two years there has been very violent protests in the city.
If the unrest should spread west, if it catches on in Tripoli for example, that would be a serious problem for Colonel Gaddafi.
Meanwhile, the state-run Jana news agency said authorities had arrested dozens of Arab nationals who were members of a "foreign network trained to damage Libya's stability, the safety of its citizens and national unity".
The group included Tunisian, Egyptian, Sudanese, Palestinian, Syrian and Turkish citizens.
However international observers considered the claim as a way to divert dissatisfaction with Colonel Gaddafi's regime.