Rebels battled to gain full control of the Libyan capital as pockets of loyalists held out and speculation mounted as to the whereabouts of Moamer Kadhafi, despite a reward of $1.7 million for the elusive strongman, dead or alive.

Meanwhile diplomatic efforts were launched at the United Nations and in Qatar by backers of the insurgents to secure the unlocking of billions of dollars of Libyan assets for the rebels.

Washington for its part said Libya's stockpile of weapons of mass destruction had been secured and that it was confident the rebel National Transitional Council (NTC) could set up governing structures after overrunning Tripoli.

A group of mostly foreign journalists who had been confined to Tripoli's Rixos Hotel by pro-Kadhafi hardliners were freed but other loyalists kidnapped four Italian journalists near the capital, and two French journalists were wounded by stray gunfire at the compound but were recovering.

The rebels also made key diplomatic gains when two of Kadhafi's staunchest African allies -- Chad and Burkina Faso -- said they recognise the NTC as the sole representative of the Libyan people.

During the afternoon, thick smoke hung over the Bab al-Aziziya complex, where rebels and Kadhafi forces fought with light arms, heavy machine guns, rocket propelled grenades and mortars.

Fighting also spread to the nearby Abu Slim area, where loyalists were on the attack, a day after they fled as rebels overran Bab al-Aziziya.

Other pro-Kadhafi troops fired heavy Grad rockets in a bid to regain control of Tripoli's airport from a small group of rebels holding on.

But manager Arabi Mustafa said that once the security problems are resolved and water and electricity restored, the airport would be reopened.

A rebel military spokesman told Al-Jazeera television that "Libyan territory is 90 to 95 percent under the control of the rebellion."

Colonel Abdullah Abu Afra said "the fall of Bab al-Aziziya marked the end of the Kadhafi regime in Tripoli and in Libya" after 42 years in power.

But rebels said Kadhafi forces were pounding insurgents holding the centre of Zuwarah, west of Tripoli, adding that reinforcements were lacking to lift the siege.

Rebels advancing towards Kadhafi's birthplace of Sirte were also blocked Wednesday in the town of Bin Jawad as loyalists kept up a stiff resistance.

"Kadhafi's forces are still fighting, we are surprised. We thought they would surrender with the fall of Tripoli," Bukatif said.

"Maybe something or somebody is behind them," he said, adding "maybe" when asked if he was referring to Kadhafi or his sons.

Rebels said they had found no trace of Kadhafi when they swarmed through his compound on Tuesday, and the whereabouts of him and his family remains a mystery.

However, in audio messages broadcast early Wednesday Kadhafi said he had abandoned his compound in a "tactical withdrawal" and urged people to "go into the streets ... and cleanse Tripoli of rats" -- referring to the rebels.

Wherever he may be, the NTC wants him, dead or alive, and has put a $1.7 million (1.2 million euro) price on his head.

"The NTC supports the initiative of businessmen who are offering two million dinars for the capture of Moamer Kadhafi, dead or alive," NTC chief Mustafa Abdel Jalil said in Benghazi.

Jalil also offered amnesty to "members of (Kadhafi's) close circle who kill him or capture him."

French President Nicolas Sarkozy said he had invited the countries he regards as "the friends of Libya" to talks in Paris on September 1 on the future of the country after Kadhafi.

"We have decided in full agreement with (British Prime Minister) David Cameron to hold a great international conference to help the free Libya of tomorrow, to show that we're passing towards the future," Sarkozy said.

In Doha the NTC sought five billion dollars in emergency aid from frozen assets at a meeting with foreign representatives from the Libya contact group, the NTC's delegate Aref Ali Nayed said.

The sum was twice that announced Tuesday by NTC number two Mahmud Jibril.

Nayed said the NTC needed the cash to pay civil servants' wages, meet other basic humanitarian needs, clear mines from towns and cities and restore schools and hospitals.

Putting the economy back on its feet, and in particular starting Libya's oil flowing again, were also priorities, he added.

But at the United Nations South Africa refused to lift a block on the United States unfreezing 1.5 billion dollars of Libyan assets to buy humanitarian aid, setting up a diplomatic showdown at the Security Council.

South Africa insisted the council wait for the African Union to decide whether to recognize the NTC at a summit Thursday before approving the move.

For its part, the Pentagon said Libya's stockpile of chemical weapons, including more than 10 tons of mustard gas, was "secure" but that an arsenal of thousands of shoulder-launched missiles remained a cause for concern.

Josh Earnest, a White House spokesman, said Washington has "confidence in the TNC" and is "encouraged by they way they have conducted themselves so far."

While journalists trapped at the Rixos Hotel since Monday walked free, four Italians were kidnapped between Zawiyah and Tripoli. Italian media said two worked for the top Italian daily Corriere della Sera, one for La Stampa and the fourth for Avenire, a Roman Catholic paper.

In other developments, close Kadhafi ally and Venezuelan President Hugo Chavez charged that his country's embassy in Tripoli was "assaulted and totally sacked," demanding that the ambassador and his staff be protected.

Chavez has been an unyielding opponent of a NATO air campaign against Kadhafi and has extended his personal support to the Libyan leader on numerous occasions during the six-month-long uprising against him.