Sirte: Muammar Gaddafi loyalists mounted a fierce counter-attack in the city of Sirte on Sunday, forcing back new regime fighters under a barrage of rockets and shelling.

Fighters of the National Transitional Council (NTC) fled helter-skelter two kilometres to the captured police headquarters in the Mediterranean city, one of Gaddafi's last holdouts.

"Run, run, run!" rang out from the retreating forces.

After absorbing rocket fire and shells from NTC fighters in the morning and early afternoon, Gaddafi diehards now concentrated in two neighbourhoods -- the Dollar and Number Two -- unleashed their own barrage late afternoon.

As Grad and other rockets, shells and machinegun fire rained down on them, NTC combatants, taken by surprise, quickly fled the positions on the edge of the two neighbourhoods that they had held since Friday night.

Thick black smoke covered the two districts.

In a provisional casualty toll issued before the breakout, medics at a field hospital on the western outskirts of Sirte said one person was killed and around a dozen injured on Sunday.

"Gaddafi fighters are now concentrated in a small place but we can't enter all at the same time. We need a plan to defeat them," Omran Allahoyb, commander of a Misrata brigade, said before the pro-Gaddafi advance.

"We can take this place in one day but I will lose 100 men," he said, adding that the best strategy would be to bomb the area of around 1.5 square kilometres into defeat.