Benghazi: Libyan rebels rounded up at least 63 people suspected of murdering their military chief and having links to Muammar Gaddafi, after an hours-long battle in their eastern stronghold of Benghazi.

Security forces patrolled the streets overnight in a bid to track down more members of the pro-Gaddafi group, a rebel spokesman said, as shoppers stocked up ahead of Ramadan, the Muslim holy month of fasting.

"We caught about 38 and later on Monday more than 25," the spokesman, Mustafa al-Sagazly said.

"Some of them ran away and we are trying to catch them all over the city," he said. "We are arresting them."

The arrests came hot on the heels of a five-hour raid by the rebel-backed February 17 brigade on a Benghazi factory, leaving four rebels and five Gaddafi loyalists dead.

Medics and rebels had said at least four rebel and 11 pro-Gaddafi fighters were killed in the fierce shootout, which erupted at around dawn on Monday during a raid on the cell holed up at a licence plate-making factory.

Rebel spokesman Mahmud Shammam said the group had been rounded up for its role in organising a prison break in Benghazi earlier in the week.

The pro-Gaddafi cell "had plans to plant car bombs in Benghazi," according to Mustafa al-Sagazly, deputy chief of the February 17 brigade.

He added the "very same group", the Katiba Yussef Shakir, was suspected in the assassination of General Abdel Fatah Yunis, a right-hand man to Gaddafi before his defection to the rebel ranks.

Ismail al-Salabi, who heads military operations for February 17, called the operation "100 percent successful" and added the rebels seized TNT explosives and several pickup trucks equipped with machine guns.

Meanwhile British Defence Secretary Liam Fox said the murder of Yunis, attributed by the British press to Al-Qaeda elements within the rebel movement, remained a mystery and that militant influence within Libya was inevitable.

"It's not yet clear who actually carried out the killing," a report said.

"Of course there are going to be militats in Libya, there are militants right across the whole of the Middle East, it would be a great surprise if there weren't some in Libya itself," he added.

Britain last week recognised the Benghazi-based opposition National Transitional Council (NTC) as Libya's legitimate government, and Fox vowed Britain would continue to back the group despite the assassination.

While the rebels have been trying to quash rumours about the mysterious death of their army chief, the Gaddafi regime said it was in contact with members of the NTC.

"There are contacts with Mahmud Jibril (number two in the NTC), and (Ali) Essawy (in charge of external relations), (religious leader Ali) Sallabi and others," deputy foreign minister Khaled Kaaim told reporters in Tripoli.

Gaddafi on Saturday night renewed his pledge "never to abandon" the battle, in an audio recording broadcast on state television despite NATO air strikes earlier the same day on the broadcaster's headquarters in Tripoli.

Libya's enemies would be "defeated in the face of the resistance and courage of the Libyan people," he said in a speech following the strikes which Tripoli said killed three journalists.

South of Benghazi, rebels reported an attack by pro-Gaddafi forces on the southern oasis town of Jalo, but said it had been repulsed.

(Agencies)