BENGHAZI, Libya — Loyalists of Moammar Gadhafi fired on "Free Libya" forces Sunday as they advanced on one of the last strongholds of the ousted leader, quashing hopes for a peaceful handover of the town, the rebel military spokesman said.

Col. Ahmed Omar Bani said Sunday evening that operations to liberate the town of Bani Walid, southeast of the Libyan capital, Tripoli, could begin within hours, started by backers of the new National Transitional Council within the town. Rebel forces now surrounding the town will march in "to give congratulations," he said, downplaying the likelihood of a bloody confrontation.

The outcome of Sunday's clash in the little-known town has taken on significance in part because at least two of Gadhafi's sons, Saif al Islam, 49, and Saadi, 38, were reported to be holed up there, and Gadhafi himself may have used it as a way station in what rebel officials have described as a southward escape. Bani also confirmed that a third son, Khamis, 28, had indeed been killed in a checkpoint skirmish last week and was buried in Bani Walid.

Khamis had commanded the best-equipped brigade in the Libyan military, which used heavy artillery to attack rebels in major towns, including Tripoli, Benghazi and Zawiyah. The Transitional Council had reported his death twice before, but Bani said he was certain it had happened this time, because residents of the town told the Council that they'd witnessed Khamis's funeral.

The spokesman last week had identified a second man killed in the same car as Abdullah Zanussi, Gadhafi's brother-in-law, but he said in fact was Zanussi's son, Mohamed.

Gadhafi's own whereabouts are still unknown, and the military spokesman said he may have fled the country. Gadhafi had issued a series of fire-breathing threats to fight to the finish last week, but he hasn't been heard from since Thursday. Transitional Council officials had last put him in Sabha, a town deep in the Sahara, and they predicted he'd flee into land-locked Niger, one of the poorest countries in Africa.

Bani Walid is one of three towns singled out by the Transitional Council for military attack if they don't surrender by Saturday. A clash was reported Sunday near Sirte, Gadhafi's hometown on the Mediterranean Sea, and there was no sign of a breakthrough in negotiations between the Transitional Council and tribal elders in Sirte. There was also no sign that Sabha, the third town named in Saturday's ultimatum, was about to surrender.

(Gutman reported from Benghazi. Enders, a McClatchy special correspondent, reported from near Bani Walid.)

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