HEISHA, Libya - Libyan rebels say they're closing in on Muammar Qaddafi and have issued an ultimatum to regime loyalists in the fugitive dictator's hometown of Sirte, his main remaining bastion: surrender this weekend or face an attack.
"We have a good idea where he is," a top rebel leader said on Tuesday.
The rebels, tightening their grip on Libya after a military blitz, also demanded that Algeria return Qaddafi's wife and three of his children who fled there Monday. Granting asylum to his family, including daughter Aisha who gave birth in Algeria on Tuesday, was an "enemy act," said Ahmed al-Darrad, the rebels' interior minister.
Rebel leaders insisted they are slowly restoring order in the war-scarred capital of Tripoli after a week of fighting, including deploying police and collecting garbage. Reporters touring Tripoli still saw chaotic scenes, including desperate motorists stealing fuel from a gas station.
In the capital's Souk al Jumma neighborhood, about 200 people pounded on the doors of a bank, demanding that it open. Civil servants said they were told they would receive a 250-dinar (about $200) advance on their salaries for the three-day Muslim holiday of Eid al-Fitr, which starts Wednesday in Libya.
The international community took another step Tuesday to help Libya's new leaders address those immediate concerns when the United Nations freed up about $1.6 billion in Libyan currency held in Britain.
Britain announced that the Security Council committee monitoring sanctions against Libya had released 1.86 billion in Libyan dinar banknotes. Britain blocked the export of the bank notes, which were manufactured by British currency printer De La Rue, to comply with U.N. sanctions.
Britain said the banknotes, worth about $1.6 billion at the official exchange rates that applied before the start of the conflict, would be securely and rapidly delivered to the Central Bank of Libya.
"This represents another major step forward in getting necessary assistance to the Libyan people, building on the remarkable progress in recent days," British Foreign Secretary William Hague said. "These banknotes ... will help address urgent humanitarian needs, instill confidence in the banking sector, pay salaries of key public sector workers and free up liquidity in the economy."
U.N. Secretary-General Ban Ki-moon, meanwhile, appealed for urgent international support and billions more for the incoming government.
The U.N. chief said he was encouraged by events on the ground and told the Security Council "I think we can now hope for a quick conclusion to the conflict and an end to the suffering of Libya's people."
But at the same time, he warned that the humanitarian situation "demands urgent action," and he called on the U.N.'s most powerful body to continue to respond positively to requests from the opposition National Transitional Council for funds.
Rebel fighters were converging on the heavily militarized town of Sirte, some 250 miles east of Tripoli.
The rebels gave pro-Qaddafi forces there a deadline of Saturday the day after the end of the Muslim holiday to complete negotiations and surrender. After that, the rebels will "act decisively and militarily," said Mustafa Abdul-Jalil, the head of the rebels' National Transitional Council.
His deputy, Ali Tarhouni, said in Tripoli that "sometimes to avoid bloodshed you must shed blood, and the faster we do this, the less blood we will shed."
In an overnight phone call to AP headquarters in New York, Qaddafi's chief spokesman, Moussa Ibrahim said the rebels' ultimatum would be rejected.
"No dignified honorable nation would accept an ultimatum from armed gangs," he said. Ibrahim reiterated Qaddafi's offer to send his son al-Saadi to negotiate with rebels and form a transitional government.
The spokesman also claimed that a Tuesday afternoon missile attack on the regime stronghold of Sirte had killed 1,000 people and left scores more injured during public prayers marking Eid. He said 12 missiles were fired, possibly from airplanes seen circling overhead.
The spokesman said he got the information on a satellite phone call with doctors and security personnel in Sirte.
The alleged attack could not be immediately confirmed. The regime has consistently exaggerated casualty tolls.
There has been speculation that Qaddafi is seeking refuge in Sirte or one of the other remaining regime strongholds, among them the towns of Bani Walid or Sabha.
"Qaddafi is now fleeing and we have a good idea where he is," Tarhouni said, without elaborating.
Ibrahim said he thinks that NATO believes Qaddafi is in Sirte "because much of his family and tribe is there."
"Maybe they have been advised by some of the leaders of the rebels to attack the city with such vigor and power in hope that the leader is there praying with his people," he told The Associated Press.
Ibrahim would not disclose Qaddafi's whereabouts except to say that he is "in Libya of course" and not planning to leave the country. Ibrahim said he himself was "somewhere south of Tripoli."
Some 90 miles west of Sirte, about a dozen armored, gun-mounted trucks were parked at a staging ground in the desert. A highway overpass provided some shade for rebels, most dressed in T-shirts and camouflage pants.
Commander Ismail Shallouf said patrols have gone 30 miles closer to Sirte, and occasionally have exchanged fire with Qaddafi fighters. Ahmed Abu Sweira, standing on the overpass, said rebels are waiting for reinforcements for the final push.
On Monday, NATO hit about three dozen Qaddafi military targets in the Sirte area. NATO insists it remains within the bounds of its original mission of protecting Libyan civilians, but appears to be paving the way for advancing rebel forces with its targeted air strikes.
Diplomatic tensions rose between the rebels and Algeria after the Algerian government agreed to grant refuge to Qaddafi's wife, Safiya, daughter Aisha and sons Hannibal and Mohammed.
In a dramatic episode, Aisha, a lawyer in her mid-30s, gave birth to her fourth child a girl as the family escaped to Algeria.
An Algerian newspaper reported that the exiles, who also included an unknown number of Qaddafi's grandchildren, had waited 12 hours to receive authorization from President Abdelaziz Bouteflika while Aisha was in labor.
Algerian U.N. Ambassador Mourad Benmehidi said in a letter to the Security Council obtained by The Associated Press that the child was born Monday "at the border without medical assistance." The Algerian Health Ministry said the child was born Tuesday.
Algerian news reports said Aisha's pregnancy was one reason for Algeria's controversial decision to take the fleeing family in. Benmehidi said Algeria allowed Qaddafi's family to enter for "humanitarian considerations."
The whole party is now wanted by Libya's new rulers. The interim government criticized Algeria's decision and demanded that Qaddafi's relatives be handed over for trial in Libya.
The fate of Qaddafi's son Khamis continues to be in doubt. On Monday, rebel fighters said they believed Khamis, commander of an elite military unit, was killed in a rebel ambush south of Tripoli last week. However, Tarhouni said Tuesday that he cannot confirm Khamis' death.
In all, Qaddafi has eight biological children, a daughter and seven sons.
Since the rebel takeover of Tripoli more than a week ago, evidence has been mounting that Qaddafi may have lied about the death of his adopted baby daughter Hana in a 1986 U.S. air strike.
The strike hit Qaddafi's home in his Tripoli compound, Bab al-Aziziya, in retaliation for the Libyan-sponsored bombing of a Berlin nightclub earlier that year that killed two U.S. servicemen. At the time, Qaddafi showed American journalists a picture of a dead baby and said it was his adopted daughter Hana the first public mention that she even existed.
Diplomats almost immediately questioned the claim. But Qaddafi kept the story alive through the years.
Adel Shaltut, a Libyan diplomat at the U.N. in Geneva, said it was common knowledge that Hana Qaddafi wasn't killed. "All Libyans knew from the very beginning that it's a lie," he told the AP, saying Hana was married and had children.
As the last vestiges of Qaddafi's regime disappear, the rebels are trying to set up a new government in Tripoli. A new Cabinet has begun meeting, although not all members are present. Leaders of the interim government, Abdul-Jalil and Mahmoud Jibril, are holding meetings abroad and have not yet arrived in the capital.
The new government also is struggling with a water shortage in the city of nearly 2 million people. They have been without running water for a week since Qaddafi loyalists attacked crews trying to restart pumping stations for aquifers deep in the desert, rebel official Aref Ali Nayeb told AP. Bottles of drinking water are reaching most of the residents in aid shipments via Tripoli's port, distributed through neighborhood councils and mosques.