Taking Sirte would bring Libya's new rulers a big step closer to establishing control of the entire, sprawling North African country almost two months after they seized the capital Tripoli, but Gaddafi loyalists are putting up stiff resistance.
National Transitional Council (NTC) forces captured Sirte's main hospital as well as the university and a lavishly built international conference centre, but one large group of anti-Gaddafi fighters fled in disarray after coming under an intense mortar volley.
The university, seized overnight, also came under a sustained counter-attack, as did the conference centre.
While Reuters correspondents had entered the landmark buildings, confirming their capture, intense fighting was now underway around all three buildings and it was unclear whether they were still in provisional government hands.
One large group of NTC fighters, approaching Sirte from the west and trying to pin down Gaddafi loyalists against the sea, saw their advance turn into a rout under heavy and accurate mortar bombardment.
Their trademark pick-up trucks raced to the rear, some running on flat tyres. One man with arm and leg wounds frantically limped away from the carnage as commanders screamed over the radios for their troops to pull back.
Soon seven fighters lay dead in a field hospital while dozens more were being treated for shrapnel wounds.
The speed of the reversal underlines the fragility of government advances and the weight of the task still ahead of them despite their leaders' upbeat assessment of the fight.
NTC chairman Abdel Jalil told a news conference in the capital Tripoli that his men had reached Sirte city centre and were combing the town for snipers.
The only other major Gaddafi-held town, Bani Walid, in the desert far to the south, was also under government siege from no fewer than five sides, he said.
"I think and I hope, with the help of God, the liberation of these two towns will be completed by the end of this week. God willing," he said.
But even as the Gaddafi counter attack appeared to be underway, another group of fighters was attacking a number of buildings in the centre of the city that they said housed Gaddafi's security forces, a Reuters witness said.
"We are now in the centre of Sirte," said commander Salam Al Shalmany. "They are in these buildings about half a kilometre from where we are. Once we finsih this, it's over. This has gone on too long."
Earlier, at the main hospital, a Reuters witness counted more than a dozen, mostly black African pro-Gaddafi fighters being frog marched away. One was punched in the head when NTC forces found a picture of the deposed leader in his pocket.
"We are trying to evacuate the sick and wounded," said Salah Mustafa, a commander of the government forces. "Most of the Gaddafi militia fled, some of them have disguised themselves as doctors. We have to investigate."
Blood and faeces lay on the floor while at least 30 patients lay on hospital beds, some of them unconscious, with an array of bullet, shrapnel and burns injuries. Most appeared malnourished.
Inside the nearby Ouagadougou centre, government fighters shot up, then tore down a large poster showing Arab and African flags and leaders where Gaddafi had held international conference to promote Arab and African unity. Other government troops went about looting flat-screen television sets.
A further important objective for the new advance on Sirte, the university, had been seized overnight, NTC forces in the east of the city said, but they came under heavy fire there on Sunday morning and some fighters had fallen back.
"Last night, we were sleeping in the university and this morning we came under random strikes there," said a fighter who had withdrawn from the position. "We have martyrs (dead) inside and we are trying to get them out."
Two bodies lay in a nearby field hospital, one with his face blown off. They had been hit by fire from an anti-aircraft gun while trying to evacuate patients from a frontline hospital, their comrades said.
Ambulances coming from the direction of the university screamed past a nearby roundabout ferrying the dead and wounded.
RISKS
The prolonged struggle to conquer Sirte and the other few remaining bastions of pro-Gaddafi loyalists has sidetracked NTC efforts to set up effective government and rebuild oil production vital to its economy.
Sirte holds symbolic significance because Gaddafi, who ruled for 42 years, turned it from a fishing village into a second capital. He built opulent villas, hotels and conference halls to house the international summits he liked to stage there.
But taking Sirte carries risks for Libya's new rulers. A drawn-out battle with many civilian casualties will breed hostility that will make it very difficult for the NTC to unite the country once the fighting is over.
Thousands of civilians have fled Sirte as fighting has intensified, describing increasingly desperate conditions for those still inside the seafront city.
There is no electricity while drinking water and food are running out, and there is the stench of rotting corpses at the city's hospital.
But Britain's defence secretary told Reuters that NATO, which has carried out air strikes effectively on behalf of anti-Gaddafi forces over much of Libya's civil war, had stayed within its U.N. mandate to protect civilians during the siege of Sirte.
"NATO has been extraordinarily careful in target selection. NATO has been very careful to minimise civilian casualties," Liam Fox told Reuters in an interview in the Libyan town of Misrata -- smashed up by pro-Gaddafi shelling during the war.
"NATO has stayed within its mandate throughout."
