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Forces loyal to the Libyan leader Muammar Gaddafi are moving into rebel territory in the east, taking an oil installation in the town of Brega.
The BBC's John Simpson in the nearby city of Ajdabiya says the 100-vehicle convoy is expected to head towards it, and an arms dump there has been bombed.
The city's defenders are in a high state of excitement and expecting an attack, our correspondent says.
In two weeks of unrest Col Gaddafi has lost control of large parts of Libya.
The violence has led to a major humanitarian crisis on the Tunisian border, with tens of thousands of foreigners, most of them Egyptian, stranded and unable to get home.
The UN says a mass evacuation is needed and thousands of lives are at stake.
Meanwhile in the capital Tripoli, where Col Gaddafi is still in charge, a fuel tanker overturned causing several large explosions.
It is not clear whether the incident was an act of sabotage.
Rebels determined
Our correspondent says Brega was defended by a handful of lightly armed rebels, but Ajdabiya is a more important target.
It has a large arms dump which has been bombed several times by pro-Gaddafi forces.
The loyalists are now only a couple of miles from Ajdabiya, the defenders say.
The rebels are determined to put up a fight but it remains to be seen whether this translates into an organised defence of the city, our correspondent says.
Source:BBC
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