Hours after loud blasts shook Libya's capital Tripoli, Muammar Gaddafi vowed to defeat NATO as his forces launched a deadly rocket assault on rebel-held Misrata.

State television on Friday aired Kadhafi's comments in what it said was a live telephone call from the Libyan leader, who has gone underground since Western nations began waging an air war in March to protect civilians from a bloody protest crackdown.

"NATO is bound to be defeated," Kadhafi said in the speech broadcast on loudspeakers in Tripoli's Green Square as thousands of flag-waving regime supporters staged their biggest rally in weeks.

"We are determined to change nothing in our country other than by our own free will... We are resisting, we are fighting," he declared.

The speech came hours after loud explosions shook Tripoli, where the Gaddafi has his residence, as NATO warplanes constantly overflew the Libyan capital.

At least five further explosions were heard early Saturday in and around the capital, an AFP journalist reported.

In the western rebel enclave of Misrata, 10 people were killed and 40 wounded when Gaddafi loyalists fired a volley of Grad rockets at the lifeline port city, rebel spokesman Ahmed Hassan said.

All the victims were civilians, he said, and were hit when rockets slammed into the western and eastern gates of the city. One woman was killed when a rocked struck her home, he said.

Hassan said that Gaddafi forces are bombing Misrata nearly every day, and that there were no air strikes by the NATO-led coalition on the loyalist forces on Friday.

Elsewhere, a road linking the towns of Zintan and Yafran was under the complete control of the insurgents and dotted with destroyed tanks and abandoned government vehicles, an AFP correspondent said.

The road, a key sector of the route to the border with Tunisia, was seized two days after the rebels overran the nearby villages of Ghanymma, Lawania and Zawit Bagoul.

Libyan Prime Minister Baghdadi al-Mahmudi said the Gaddafi's regime was in contact with rebels for negotiations -- something the insurgents have repeatedly denied.

"Our doors are open to all and we are in contact with all the parties," Mahmudi told reporters. "We are sure meetings have taken place" in Egypt, France, Norway and Tunisia, and we "can name the persons," who attended from the rebels' side.

"Ask the Egyptians, French, Norwegians and Tunisians for information. They will tell you the truth," he said. "We are sure of our meetings and everything has been recorded."

Mahmud Jibril of the opposition National Transitional Council (NTC) earlier denied suggestions by a Russian envoy that the rebel leadership had been negotiating with the Gaddafi regime.

"I can assure you there is and there was no negotiation between the NTC and the regime," said Jibril, who is in the Italian city of Naples where NATO's Libya operation is headquartered.

At a joint news conference with Italian Foreign Minister Franco Frattini, Jibril said that if there were talks, the NTC would "announce it out of commitment to our friends all over the world".

An NTC official in the opposition stronghold Benghazi in eastern Libya was even more blunt.

"Gaddafi must go. Anyone from the rebel side who negotiates his staying in power would immediately have an NTC arrest warrant issued against him," the official told AFP, speaking on condition of anonymity.

Mahmudi said Thursday that Gaddafi's departure was a "red line" that cannot be crossed, despite growing international calls for him to quit and the armed insurrection against his 41-year rule.

Russian envoy Mikhail Margelov said that Gaddafi representatives had made contact with the rebels in European capitals including Berlin, Paris and Oslo.

France said it had no knowledge of the negotiations.

"If there have been direct contacts, we're not involved and we didn't set them up," foreign ministry spokesman Bernard Valero said.

NATO on Friday slammed as "cynical" an offer in an Italian newspaper interview by Moamer Gaddafi's son, Seif al-Islam, that the regime in Tripoli was ready to organise internationally supervised elections.

"Once again, it is an instance of what I would call a cynical PR ploy," said alliance spokeswoman Oana Lungescu during a news briefing on the military campaign.

"It is hard to imagine that after 41 years in which Gaddafi abolished elections, the constitution, political parties, trade unions... (that) overnight a dictator would turn into a democrat."