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Libyan rebels have withdrawn from the oil town of Ras Lanuf under bombardment from Colonel Muammar Gaddafi's forces, exposing their weakness without Western support.
The rapid reverse comes just two days after the rebels raced westwards along the coastal road in pursuit of the Libyan dictator's forces.
The government army had seen its tanks and artillery demolished in five days of coalition aerial assault in the town of Ajdabiyah, but now appears to have regrouped.
Col Gaddafi's troops first ambushed the insurgent convoy outside the leader's hometown of Sirte, then outflanked them through the desert, a manoeuvre requiring the sort of discipline entirely lacking in ragtag rebel force.
On the offensive, government tanks and artillery have unleashed a fierce bombardment on towns and cities, forcing the rebels to flee.
The tactic appears to have worked once again in Ras Lanuf, an oil terminal town 230 miles east of the capital Tripoli.
"Gaddafi hit us with huge rockets. He has entered Ras Lanuf," rebel fighter Faraj Muftah told Reuters after pulling out of Ras Lanuf.
"We were at the western gate in Ras Lanuf and we were bombarded," said a second fighter, Hisham.
Scores of rebel 4x4 pickups were seen racing east, away from Ras Lanuf.
Without Western air strikes, the rebels seem unable to make advances or even hold their positions against Col Gaddafi's armour.
The United States and France have raised the possibility of arming the rebels, though both stressed no decision had yet been taken.
"I'm not ruling it in, I'm not ruling it out," US President Barack Obama told NBC overnight.
Yesterday a senior American military commander warned that Libyan rebel forces may have been infiltrated by al-Qaeda fighters.
Admiral James Stavridis, Nato's Supreme Allied Commander, Europe, said that American intelligence had picked up "flickers" of terrorist activity among the rebel groups. Senior British government figures described the comment as "very alarming".
The plan to arm rebels is likely to spark further splits in the international coalition, with Nato and Italian sources indicating the move would require another United Nations resolution.
On Tuesday more than 40 ministers from around the world met at a conference in London to discuss the situation in Libya.
They agreed to establish formal links with opposition groups in the rebel-stronghold of Benghazi with several countries sending official envoys to the area. Libyan opposition leaders yesterday also travelled to Britain for talks with David Cameron and Hillary Clinton, the US Secretary of State.
Britain and America signalled they would allow Col Gaddafi to seek exile – rather than face a war crimes trial – if he agrees to step aside immediately.
However, the emerging plan being discussed for the political future of Libya was undermined by the growing military doubts over the make-up of the rebel groups.
"We are examining very closely the content, composition, the personalities, who are the leaders of these opposition forces," Admiral Stavridis said in testimony yesterday to the US Senate.
While the opposition's leadership appeared to be "responsible men and women" fighting the Gaddafi regime, Admiral Stavridis said, "we have seen flickers in the intelligence of potential al Qaeda, Hizbollah, we've seen different things."
"But at this point I don't have detail sufficient to say there is a significant al-Qaeda presence or any other terrorist presence," he added.
The remarks are likely to be seized on by Col Gaddafi who has repeatedly claimed that the uprising is being driven by terrorists.
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