Search for members of Gaddafi family focuses on town of Bani Walid, near the borders with Chad and Niger Libyan officials believe that prominent members of Colonel Muammar Gaddafi’s family – and perhaps the fugitive leader himself – have sought refuge in the town of Bani Walid, 100 miles south-east of Tripoli, which rebel forces have surrounded. The hunt for Gaddafi is now focused on the town and the stretch of road which leads south towards the desert city of Sabha, near Libya’s borders with Chad and Niger. The southern road is blocked, as is the exit north to Sirte. Military leaders and western officials are now certain that Gaddafi is still in Libya and does not intend to try to join his wife Safia, daughter Aisha and sons Mohammed and Hannibal in exile in Algeria. They also believe he held a brief family get-together last Friday afternoon with two of his sons, Khamis and Saadi, as well as Safia and Aisha, before leaving the capital in a convoy of civilian cars. The growing confidence about Gaddafi’s movements comes mainly from interviews with captured loyalist soldiers, including four of Khamis Gaddafi’s guards who were seized near the town of Tahouna hours after the family rendezvous, following a battle in which Khamis is believed to have been killed. “I was assigned to be [Khamis's] main guard that day,” said Abdul Salam Tahrar, a 17-year-old from Sabha brought by rebels to meet the Guardian in Tahouna. “I was in the truck behind him on the [heavy weapon] when his car was hit. He was burned.” A second guard interviewed by the Guardian said he had seen the explosion that apparently killed Khamis Gaddafi. “We were travelling in an 80-car convoy and we were told we were going to meet with Mutassim [another son of Gaddafi's] in Bani Walid.” The guards are being detained in separate cells. Two other guards are also being held. Their captors believe the accounts of all four to be credible. Separately, tribal chiefs from the Warfalla tribe, which is dominant in Bani Walid, have confirmed to rebel leaders in Tripoli that they have received important guests in recent days and have offered them their protection. The admission comes as officials in Tripoli claim to have solid information that the Gaddafi convoy that fled to Algeria over the weekend carrying Safia, Aisha and the two younger Gaddafi sons set off from Bani Walid last Friday evening. Rebel officials, backed by European intelligence agencies, are trying to establish how the Gaddafi clan made it to Bani Walid, with rebel leaders and Khamis’s guards adamant that they did not travel the same route through Tahouna that was used on Khamis’s ill-fated mission. Rebels now believe the family group took a different and more difficult route to the same destination – in a pointer to how the fugitive sons are likely to move in future. Both guards were adamant they saw Gaddafi leave Khamis’s compound with his wife and daughter. “He was there for around 15 minutes,” said Tahrar. “He was wearing civilian clothes and a head scarf, but his face was open and very clear. His wife and daughter were with him and so was Saadi. They left in a convoy of around 25 cars and he was in a Toyota pick-up. They all left together and they went south.” Rebels are in control of Tahouna, but control only roughly half of the 50-mile road south to Bani Walid. In a further sign of heightened interest in the town on Wednesday, Nato jets bombed three targets there, which they claimed were command and control centres and weapons dumps. The frontline of the push from Tripoli to Bani Walid is around 20 miles short of the town and is unlikely to move over the next two days, because of the Islamic festival of Eid, which marks the end of Ramadan. “We are giving the Warfalla time to consider their position,” said Colonel Hegegis at the Tahouna base. “We want to negotiate this if we can. They are one tribe in one town and we don’t want to fight if we don’t have to.” The reluctance to order an assault on Bani Walid also appears to stem from Saadi Gaddafi’s attempts to negotiate a transfer of power with Tripoli’s military council. The dictator’s third son contacted the military council’s commander, Abdul Hakim Belhaj to plead his own case and that of his father, Belhaj said. According to Belhaj, Saadi acknowledged the hopelessness of the family’s position. “I told him, ‘This is good,’” Belhaj told the Associated Press. “What is important for us is not to shed Libyan blood. For the members of the regime to surrender is the best way to do this.” Saadi was talking from a traceable phoneline, which suggests he is no longer trying to keep his own location a secret. Gaddafi’s cash flown out from Britain to help interim government The RAF is flying crates of Libyan banknotes worth more than £950m to the country to pay public workers and replenish cash machines. Muammar Gaddafi had ordered the cash – 1.8bn Libyan dinars – from a British printing company but the government blocked its shipment in March in one of the first moves to put pressure on the dictator. It has been kept in a safe. One-dinar and 50-dinar notes feature a portrait of Gaddafi but it could not be confirmed if the shipment included this design. The RAF was planning to hand over the cash to leaders of the NTC in its stronghold of Benghazi to help ease the flow of cash during Eid celebrations. Many public sector workers have not received a salary for weeks. The UN sanctions committee agreed to release the notes following a request from Britain after the NTC took control of much of the country and Gaddafi went into hiding. The shortage of hard cash has been a problem throughout the conflict, with long lines forming outside banks as people sought to take out their money. The NTC frequently complained of a lack of cash in areas under its control. William Hague, the foreign secretary, said the money represented a “major step forward” in helping the Libyan people. “These banknotes, which were frozen in the UK under UN sanctions, will help address urgent humanitarian needs, instil confidence in the banking sector, pay salaries of key public sector workers and free up liquidity in the economy,” he said. Muammar Gaddafi Libya Martin Chulov guardian.co.uk