Fierce resistance from fighters loyal to the dictator have stopped rebels in their tracks in the hills leading to Bani Walid Nato launched air strikes against Bani Walid, one of the last remaining Libyan towns still held by forces loyal to Muammar Gaddafi. Loyalists were mounting fierce resistance, fuelling speculation about which regime figures were hiding in the desert bastion. Rebel commanders believe several hundred fanatical fighters are trapped in the town, a maze of hills and fortified positions 90 miles south-east of the capital, Tripoli. Street-to-street fighting raged and loyalists were accused of firing Grad rockets from civilian homes. Air strikes hammered fortified positions near the town centre, including buildings thought to shelter Scud missiles that have already been launched against rebel-held Misrata. Overnight fighting saw eight prisoners, one of them a brigadier, captured by rebel patrols, and one unit of Misrata’s Halbus brigade, thought to be operating with forward air controllers of the SAS, is now six miles from the town centre. But the fierce resistance convinced rebel forces to cancel an attack planned for the early hours of the morning, together with an offensive further east at Sirte, Gaddafi’s birthplace and his final coastal stronghold. Three weeks after rebel forces entered Tripoli, and with the new government, the National Transitional Council, completing its move to the capital, loyalist units continue to hold out in Sirte and in a series of desert towns far to the south. The impetus appears to be not realistic hopes of victory but fear of retribution if loyalist units surrender. War crimes investigations are already well advanced in Libya, and lists of names linked to so-called blood crimes have been circulated around rebel units, with trial and execution the likely fate of Gaddafi loyalists who surrender. Regular soldiers, by contrast, are deserting in droves, with rebel units finding outlying positions around Bani Walid deserted. Khalid Abdula Salem, commander of the rebel Western Front, said advanced units were inside the suburbs of the sprawling town and found many people flying the green flag of Gaddafi. He said no reprisals were being taken against them. “Some houses now have our flag, some have the green flag. For those houses, we take down the green flag.” He said that an attack order for the early hours of the morning was cancelled, apparently to give Nato jets freedom to strike. “We have an order from the National Transitional Council not to go inside,” he said. Ranged against the rebels are more than 600 diehard Gaddafi loyalists, including men of the Legion Thoria,Gaddafi’s secret police, and units of the elite 32nd Brigade, commanded by the dictator’s son Khamis. Khamis is thought to have fled the town, leaving his men to their fate. Salem said the town’s defenders also included mercenaries from a rebel faction in Darfur, who had first been encountered when Misratan rebels broke their siege late last month. Bani Walid will prove a tough nut to crack: loyalist forces are dug into caves among the twisting valleys that lead into the town. In the town centre they are barricaded into a former Kalashnikov machine-gun factory, the university and a half-built replica castle built on a hill as a luxury residence for Gaddafi. Bani Walid’s tribal elders, who were once among Gaddafi’s staunchest supporters, last week gave their permission for opposition forces to enter the town, but say they are powerless to overcome the loyalist units within. Instead, it is likely the rebels will have to winkle them out: at the rebel forward base of Abdul Rauf, five tanks and more than 100 black pickup trucks, most mounting rockets or anti-aircraft guns, stood ready for an assault. Standing at a checkpoint facing the empty desert highway that leads to the town, rebel fighter Abdul Fatah Susi said: “The guys in there [Bani Walid] are Legion Thoria, that’s why they don’t want to give up. “We are ready to attack.” Libya Muammar Gaddafi Arab and Middle East unrest Middle East Africa Nato Chris Stephen Abdul Raufu Mustapha David Smith guardian.co.uk