Moammar Gadhafi is trying to strike a deal with opposition leaders, saying he will step down as Libya's leader if they can guarantee him safe passage out of the country and promise that neither he nor his family will face prosecution, an official with the opposition said Tuesday.
Musa Ibrahim, a government spokesman, vehemently disputed the claim saying reports of negotiations with the opposition are "lies."
Despite government denials, a member of the opposition says it has submitted counter-offers with several demands. Among them is a stipulation that Gadhafi has to immediately concede he is not the ruler of Libya, said Amal Bugaigis, a member of the opposition group called the February 17 Coalition.
The devlopment comes as Libya enters its fourth week of bloody clashes Tuesday and there was little doubt that the situation had turned into all-out civil war.
Rebels have seized several cities from government control and the army has fiercely fought to reclaim some of them.
Death toll estimates have ranged from more than 1,000 to as many as 2,000. Thousands more have fled the country, prompting a human rights group to once again urge both sides to allow humanitarian aid in.
"Both the Libyan government and opposition forces need to allow unhindered access for aid organizations to assist civilians," Bill Frelick, refugee program director at Human Rights Watch said Tuesday. "People living in areas of heavy fighting in western Libya are now in dire need of medical aid and other assistance."
Late Monday night, the Gulf Cooperation Council said Libya had rejected its offer of humanitarian aid. The council is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
Meanwhile, Gadhafi took aim at the rebel-controlled town of Ras Lanuf, launching aerial strikes Monday to crush the uprising against him.
Gadhafi's aerial forces targeted the main road heading into the oil town after launching another air strike earlier, five kilometers (3.1 miles) southeast of the city. The opposition fired anti-aircraft guns in response.
The protests against Gadhafi began February 15 as anti-government demonstrators sought the ouster of the 68-year-old Gadhafi who has ruled for nearly 42 years of rule.
It started as the kind of revolution that swept neighboring Tunisia and Egypt, but since then the uprising has turned into warfare.
And as reports continue to emerge of the government's use of force against civilians, the international community has been left pondering strategies on how to end the violence.
Three members of the U.N. Security Council -- France, Britain, and the United States -- were working Monday on a possible resolution that would include language on a no-fly zone over Libya, diplomatic sources at the United Nations said. And the Gulf Cooperation Council said Monday night they supported such an action.
But any kind of military intervention could face sharp criticism from Russia and China, two permanent members of the council that wield veto power.
U.S. President Barack Obama said Monday he had a "very clear message to those who are around Col. Gadhafi."
"It is their choice to make how they operate moving forward and they will be held accountable for whatever violence continues to take place there," he said.
NATO said it has begun around-the-clock surveillance flights of Libya.
"We've got NATO as we speak consulting in Brussels around a wide range of potential options, including potential military options," Obama added.
With no clear end to the deadly clashes in sight, U.N. Secretary-General Ban Ki-moon appointed a new special envoy to Libya to discuss the crisis with officials in Tripoli.
The fierce fighting has sparked the flight of Libyans and foreigners out of Libya, with nations across the globe scrambling to help people leave.
About 200,000 people have fled Libya with nearly equal numbers going to Tunisia and Egypt, the U.N. refugee agency has said.
But between 15,000 and 17,000 people are still at a refugee camp near the Libya-Tunisia border. Of those left, the majority are from Bangladesh, the U.N. refugee agency said. The group plans to start running chartered flights to there Tuesday.
A man who said he was trapped in Misrata, a city east of Tripoli that has seen heavy clashes, said the rebels were running out of weapons -- but will continue to fight.
"Maybe tomorrow I'll still be alive, I don't know. I have nothing to lose," the man said. "Nobody believes he will be alive tomorrow. Nobody knows. We need support."