Forces loyal to Libya's new government have taken control of the strategic city of Sabha, which controls the main road south to Niger. Fighters have been firing into the air to celebrate its capture, which means anti-Gaddafi forces now control southern Libya. The desert town was one of the last strongholds of Col Muammar Gaddafi. It was seen as a possible hiding place for the ousted leader and senior aides, but his whereabouts remain unknown. Libya's leader for four decades, Col Gaddafi has been in hiding since opposition forces captured the capital Tripoli late last month. Two other Gaddafi strongholds - Bani Walid south-east of Tripoli and the fugitive leader's birthplace Sirte - are still offering strong resistance but are surrounded by troops loyal to the National Transitional Council. 'Totally free' Sabha, a traditional stronghold of Col Gaddafi's tribe, the Qadhadfa, is the largest Libyan city in the Sahara desert. The BBC's Damian Grammaticas, inside Sabha, said he could hear the sound of NTC fighters firing into the air in celebration. "Sabha is totally free," Suleiman Khalifa, head of the Sabha local council was quoted as saying by AFP. "Eighteen [NTC] fighters were killed during the final operation." But our correspondent said there were still a few pockets in the city where pro-Gaddafi snipers reportedly remained, he added. With roads to Tunisia, Egypt, Chad and Sudan largely controlled by anti-Gaddafi forces, Niger has been used as an exit route by members of the ousted leader's inner circle fleeing the NTC advance - including his son Saadi. Meanwhile, NTC forces said they had captured all three main towns in the al-Jufra oasis in the south of the country - Hun, Waddan and Sokna. In the capital Tripoli on Thursday, the US raised its flag over its embassy for the first time since the fall of Col Gaddafi. The move came a day after US Ambassador Gene Cretz arrived back in the country. Libya's Interim Prime Minister Mahmoud Jibril, who is at the UN General Assembly meeting in New York, has said he expected a new government to be announced within 10 days. The NTC, which has been trying to assert its authority in Tripoli after more than six months of fighting, told UK officials it had found about 28bn dinars ($23bn, £15bn) of funds unspent by Col Gaddafi in Libya's central bank. Meanwhile, former Prime Minister al-Baghdadi al-Mahmoudi was arrested in Tunisia and has been sentenced to six months in prison, officials say. Mr Mahmoudi was arrested on Wednesday in Tamaghza, in southern Tunisia, close to the border with Algeria. He was jailed for entering Tunisia illegally. He served as prime minister until Col Muammar Gaddafi was ousted last month.