DJERBA, Tunisia (Reuters) - Libyan rebels and representatives of Muammar Gaddafi's government held negotiations late on Sunday in a hotel in southern Tunisia, a source with direct knowledge of the talks told Reuters.

A spokesman for Gaddafi's government denied there were any talks about the Libyan leader's departure, and said reports about such negotiations were part of a media war against Tripoli. There was no immediate comment from rebel officials.

The talks were being conducted behind closed doors at a hotel on the Tunisian island of Djerba near the border with Libya, said the source, who spoke on condition of anonymity. He did not identify any of those involved in the negotiations.

"Representatives of the rebels and Gaddafi representatives are having a meeting now," said the source.

Speculation that Gaddafi may seek talks has intensified since rebel fighters fought their way into the town of Zawiyah west of Tripoli at the weekend, cutting off Gaddafi's stronghold in the capital from its supply lifeline to Tunisia.

A Reuters reporter who tried to get into the hotel which, according to the source, was hosting the talks, was turned away by security staff at the gate. They said the hotel was closed to visitors for the evening.

Lights were on inside the hotel, and a man in jeans and T-shirt was standing outside with hotel security staff, holding a list in his hand.

Libya's conflict began six months ago when thousands of people inspired by popular uprisings in neighbouring Tunisia and Egypt protested against Gaddafi's 41-year rule.

His security forces mounted a crackdown in which hundreds of people were killed. Rebel fighters, backed by NATO warplanes, have since been trying to advance on the capital in fighting that has killed thousands more people.

Gaddafi says the rebels are criminals and al Qaeda militants, and has described the NATO bombing campaign as an act of colonial aggression aimed at stealing Libya's plentiful oil reserves.

In Tripoli, government spokesman Moussa Ibrahim blamed Western leaders and the media for the spread of rumours that Gaddafi's government was engaged in talks on the leader's departure from Libya.

"This information is absolutely incorrect and it is part of a media war against us. Their target is to confuse us, break our spirit, and shake our morale," he said.

"The leader is here in Libya, fighting for the freedom of our nation. He will not leave Libya," Ibrahim said.

(Additional reporting by Tarek Amara in Tunis and Missy Ryan in Tunis; Writing by Christian Lowe; Editing by Tim Pearce)

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