The last rebel stronghold before Benghazi, the capital of "Free Libya", came under a fierce onslaught from Muammar Gaddafi's forces yesterday. The attack from land and air set buildings on fire and drove militant fighters out of most of Ajdabiya.

Following a sustained barrage, regime troops took over the city, leading to an exodus of terrified residents.

A small number of reinforcements sent from Benghazi to bolster the resistance in the city was passed by groups of revolutionary forces, the Shabaab, fleeing in the opposite direction.

Houses in a residential area were hit by missile strikes and ambulances and private cars ferried casualties, including children, from the area. Benghazi lies just 90 minutes by road to the east and by late afternoon the regime units were seen on desert tracks attempting to cut off that route.

With one contingent of the dwindling numbers of rebel fighters trapped in Ajdabiya, Colonel Gaddafi's armour could move on to Benghazi, possibly today. The aid group Medicins Sans Frontiers said it had been forced to withdraw from the rebel capital.

The opposition leadership in Benghazi had vowed to hold Ajdabiya and maintained that the regime's troops would have no appetite for potential house-to-house fighting in the densely populated urban centre.

They have insisted that revolutionary "special forces" had retaken the oil port of Brega. Amid the salvos of shelling, smoke and confusion, the claims appeared to be illusory.

The main gate to the city where the Shabaab had built berms, dug ditches and piled up sandbags was hastily abandoned after two air strikes. Mohammed Jawad, a rebel fighter heading out of the city, shouted: "Where is the no-fly zone they promised us? Will they do this when we are all dead?"

With the regime rapidly advancing deep into rebel-held "free Libya" the likelihood of intervention by the West looks increasingly unlikely after British-backed efforts to establish a no-fly zone were dealt another setback as a meeting of foreign ministers of the Group of Eight major economies broke up in Paris with no consensus.