Large explosions were heard in the eastern Libyan city of Benghazi early today, and residents said that leader Muammar Gaddafi's forces were attacking the rebel stronghold.
Libya had declared a unilateral ceasefire yesterday after the United Nations Security Council authorised a no-fly zone over the country, but the United States had said the ceasefire was not being respected.
A fighter jet could be heard over Benghazi before being later shot down in flames, a reporter said, adding that the explosions were strong enough to shake a building. Rebel forces in the city were returning fire.
"The explosions started about 2am. Gaddafi's forces are advancing, we hear they're 20 kms from Benghazi," witness Faraj Ali said.
"It's land-based fire. We saw one aircraft," he added.
Jamal bin Nour, a member of a neighbourhood watch group, said he had received a call to say pro-Gaddafi troops were landing by boat, but it was impossible to confirm the information.
The city has been rife with rumours and hearsay that is virtually impossible to verify due to lack of communications.
Trying to stave off Western military intervention, Gaddafi's government had declared a ceasefire and invited in observers to prove forces have laid down their arms.
Britain and France have taken the lead in plans to enforce a no-fly zone, sending fighter jets to the Mediterranean and staging a crisis summit in Paris with the UN and Arab allies.
In Washington, President Obama ruled out the use of American ground troops but warned that the US, which has an array of naval and air forces would join military action.
In a joint statement to Gaddafi, the United States, Britain and France -- backed by unspecified Arab countries -- said a ceasefire must begin "immediately" in Libya, the French presidential palace said.
Following the ceasefire announcement from Tripoli, opposition groups claimed shells continued to rain down on them and they accused the Libyan leader of lying.
Libya's deputy foreign minister, Khaled Kaim, denied government forces had violated the ceasefire and invited four nations to send observers to monitor compliance - Germany, China, Turkey and Malta.
"The ceasefire for us means no military operations whatsoever, big or small," he told reporters in Tripoli.
He said military forces were positioned outside Benghazi but that the government had no intention of sending them into the city.