Forces loyal to Libyan strongman Moamer Kadhafi seized the southeastern city of Al Kufrah on Thursday, rebels told AFP.
"Sixty 4WD cars loaded with about 250 fighters of Kadhafi forces arrived to Al Kufrah," a rebel fighter told AFP.
He said there were "no casualties" as rebels withdrew after "putting up a light resistance," adding that Kadhafi forces were "now in control of three quarters of the city."
"They attacked the court and raised a green flag" in support of Kadhafi, another rebel said.
A media spokesman for the Benghazi-based opposition National Transitional Council confirmed the information.
"We are in the process of sending reinforcements," said Jalal al-Gallal.
Kufrah is the main city in Kufrah province, which lies in the southeastern corner of the country, bordering Chad, Sudan and Egypt.
Concrete 'training bombs'
French jet are dropping inert bombs packed with concrete instead of explosives to destroy Libyan ruler Moamer Kadhafi's tanks without killing civilians, the military said Thursday.
Military spokesman Thierry Burkhard denied rumours the use of the 300-kilo (660-pound) training devices was prompted by a shortage of real bombs. He said the first such strike crushed an armoured vehicle on Tuesday.
"The aim of this munition ... is to use the effect of the impact while limiting the risk of collateral damage," Burkhard told reporters. "It is a very precise strike. There is no, or very little, shrapnel thrown out."
The military said French warplanes have made 216 sorties in Libya over the past week and destroyed targets including 15 armoured vehicles and big guns as well as a munitions depot.
Burkhard said French forces were also continuing to use real bombs against other Kadhafi targets in the Nato-led assault, which aims to frustrate Kadhafi's forces and protect civilians in his assault on rebels.