Libya's government said on Tuesday it is ready to negotiate reforms but only as long as Muammer Gaddafi is not forced out, as loyalists troops pushed rebel fighters back from the key oil port of Brega.

Gaddafi's son Seif al-Islam meanwhile dismissed former foreign minister Mussa Kussa, who defected to the West last week, as just a 'sick and old' man who had succumbed to the psychological pressures of war.

Libyan government spokesman Mussa Ibrahim told journalists in Tripoli that everything except the departure of Gaddafi was negotiable, saying he was a unifying figure after ruling the nation for four decades.

"What kind of political system is implemented in the country? This is negotiable, we can talk about it," Ibrahim said.

"We can have anything, elections, referendums."

But Gaddafi's future was sacrosanct, he stressed, only hours after opposition rebels flatly rejected a reported peace deal that could see the embattled leader's son take charge of the north African nation.

Gaddafi was 'the safety valve' for the unity of the country's tribes and people, Ibrahim said.

"We think he is very important to lead any transition to a democratic and transparent model."

In a show of defiance, Gaddafi greeted supporters late on Monday in his first public appearance since March 22 at his Bab el-Aziziya residence in Tripoli, bombed by coalition forces two days earlier, national television said.

Seif al-Islam, long seen as the successor to his father before the wave of protests shook the country, briefly showed up at a Tripoli hotel to record an interview with the BBC in which he made dismissive comments about Kussa, once a pillar of the regime.

Seif, who had not been seen in public since coalition air strikes began on March 19, said Kussa had been allowed to leave the country for medical treatment.

"Regarding Mussa Kussa, he said, 'I'm on a travel ban list and I'm sick an I have to go every three months to Cromwell hospital, in London, if I can get permission. I want to go there,' so ... and we allow him to go to Djerba, in Tunisia, so there's nothing against that," Seif said.

He added: "We have been bombed for two weeks, imagine the psychological pressure and you are sick and old, so you resign. It's a war."

Asked what information Kussa might provide the West, Seif said: "He's sick, he's sick and old, of course, he would come out with funny stories."

But he dismissed the idea Kussa might have secrets to share.

"Like what? The British and Americans know about Lockerbie, there's no secrets anymore." And he scoffed at suggestions that his father might stand down.

"You will see," he said.

The US government lifted sanctions against Kussa after he defected to Britain, a move designed to further weaken Gaddafi's inner circle.

Kussa's assets were frozen last month as part of a US and allied campaign to pile pressure on the Libyan leader and his closest advisers.

Gaddafi's forces were hit by a NATO airstrike near Brega after they launched an intensive artillery barrage that sent rebels fleeing from the outskirts of the east Libya port.

Two loyalist pick-up trucks heading for rebel positions were destroyed in the morning raid, but the soldiers inside appeared to have escaped unhurt, an AFP correspondent said.

The airstrike occurred just east of Brega, the scene of fierce fighting over the past week, as Gaddafi's forces began pushing rebels back towards the opposition-held transport hub of Ajdabiya, 80 kilometres (50 miles) away.

Just minutes before the NATO airstrike, entire families were seen fleeing the port town in cars, saying they could no longer take the heavy fighting between the ill-equipped rebels and the better-armed Gaddafi forces.

"Brega is almost deserted. There are only few men and their sons to guard the houses," Sami Ali, a resident of Brega told AFP.

"Our men (rebels) are in the city (on the east), but the forces of Gaddafi are shooting at them (from the west)."

Tuesday's thrust by the loyalists appeared to mark the first real movement in the ground battle since last Thursday, when the two sides hunkered down around Brega after Gaddafi's forces sent the rebels stampeding out of a string of vital oil terminals.

Despite days of intense exchanges, neither side was able to make any headway, with Gaddafi's men not willing to risk advancing through the open desert, where they are easy targets for NATO air strikes, and the insurgents without the necessary weaponry to counter the loyalists' artillery.

Meanwhile, a tanker was due to dock in the key port of Tobruk on Tuesday to pick up the first oil cargo from the rebel-held part of Libya in 18 days, a spokesman for Lloyd's List said.

"There is a tanker which is scheduled to arrive later today at the oil terminal near Tobruk, according to Lloyd's Intelligence checking data," said Michelle Wiese Bockmann, markets editor of Lloyd's List, a shipping news and data provider.