LIBYAN rebels have retreated under air strikes and shelling by government forces, as Arab states said the regime has lost legitimacy and backed a no-fly zone to ground its warplanes.

After having abandoned an operation to recapture the oil town of Ras Lanuf, the outgunned anti-regime fighters struggled to set up a new defensive line 30 kilometres further east along a coastal road towards Brega.

Brega is the last main town before Ajdabiya, gateway to eastern Libya on the roads to the main rebel cities of Benghazi and Tobruk.

Despite their losses on the ground, the rebels won a key battle at the Arab League which during crisis talks in Cairo came out in support of plans to impose a no-fly zone over Libya.

The 22-member organisation also decided to make contact with the rebels’ provisional national council, in moves welcomed by the United States and Britain.

Arab foreign ministers urged the UN Security Council “to assume its responsibilities in the face of the deteriorating situation in Libya and take the necessary measures to impose an air exclusion zone for Libyan warplanes.”

The decision was adopted by nine of the 11 foreign ministers attending the meeting at the organisation’s headquarters in Egypt’s capital from which Libyan envoys were excluded, with Algeria and Syria voting against.

The pan-Arab organisation also announced its recognition of the transitional national council set up by the rebels in their eastern stronghold of Benghazi and said they would open contact with the group.

The rebels’ 30-member council had urged the Arab League to recognise it as representing Libya instead of Mummar Gaddafi’s regime and to back a no-fly zone to curb attacks on its fighters, in a letter to the league’s chief, Amr Mussa.

Mr Mussa himself has called for a no-fly zone as proposed by Western countries and said he wanted the pan-Arab organisation to play a role in imposing it, in an interview published yesterday.

In Benghazi, thousands of women held a demonstration of support of a no-fly zone. “We don’t want foreign intervention, all we want is an air exclusion zone and our boys will do the rest,” said Nada al-Turki, an economics student.

An Al-Jazeera cameraman, meanwhile, was killed in an ambush near Benghazi, the Arab satellite channel said, in the first reported death of a foreign journalist in the month-old conflict.

On Friday, EU leaders also agreed at an emergency summit to talk to Gaddafi’s opponents and protect Libyan civilians “by all necessary means” while stopping short of an outright military threat.

They demanded Gaddafi “relinquish power immediately” and deemed the national council based in Benghazi “a political interlocutor.”

However, there was no mention at the EU summit of calls from Britain and France for a no-fly zone, and strident demands from French President Nicolas Sarkozy for “targeted action” against Gaddafi went unheeded.

Seif al-Islam, Gaddafi’s son, said in Italian newspaper interviews published that he was confident government troops would defeat the rebels, adding they had already retaken control over “90 per cent of the country.”

He swore there would be no negotiations, branding the rebels terrorists and saying there would be a “war to the end.”

A UN envoy arrived in Tripoli yesterday to meet with Libyan officials to discuss access to the country for humanitarian relief efforts, the United Nations said.

Tripoli has so far made no mention of a mission by former Jordanian foreign minister Abdul Ilah Khatib, dispatched by UN chief Ban Ki-moon to raise international concerns about Gaddafi’s deadly crackdown on protests.

Mr Khatib, due in Tripoli early next week, would put across to the regime “in no uncertain terms the concerns of the United Nations and the international community,” Mr Ban told reporters in New York.

The envoy would have a political role in trying to end the conflict but also to try to open up humanitarian access to the Libyan population, Mr Ban said.

US President Barack Obama said on Friday the world was “tightening the noose” on Gaddafi, but acknowledged he was “concerned” the Libyan strongman could defeat the rebels.

Mr Obama said he would appoint an envoy to the Libyan opposition as part of a bid to “change the balance” of the military situation in Libya, and warned the world had an obligation to avoid a massacre.

But US Defence Secretary Robert Gates played up Washington’s reticence over a no-fly zone. “The question is whether it’s a wise thing to do and that’s the discussion that’s going on at a political level,” he said.

The European Union has also stressed the need for “a clear legal basis and support from the region,” reflecting divisions over the political fallout from a foreign military intervention.

The EU called for an urgent summit on the crisis along with the Arab League and the African Union, which on Friday rejected military intervention but tasked five presidents of member states to mediate.

In other developments in the Middle East, five protesters including a 12-year-old schoolboy were killed in fresh bloodshed in Yemen, as clashes between police and anti-regime demonstrators raged across the country.

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