Troops loyal to Libya's transitional government said on Saturday they were advancing on Bani Walid, a day after clashes with forces loyal to deposed leader Moamer Gaddafi left nine people killed in the area, DPA reported.
Troops had crossed through residential areas, and snipers were the only obstacle to further advance, military commander Omar Salem told the Benghazi-based Quryna news website.
Salem said he expected his troops would take the town in two days.
Bani Walid, located 400 kilometres south-east of Tripoli, is one of two main strongholds for Gaddafi's forces, along with the fugitive leader's hometown Sirte, where a few loyalists are still holding out.
For around a week, commanders have been saying that "victory is on the horizon."
Previous bids to capture Bani Walid have failed because of the stiff resistance from an estimated 1,000 Gaddafi loyalists who are believed to be in position in the mountains around the town