Libyan leader Moamer Kadhafi\'s youngest son and three grandchildren were killed in an air strike, a spokesman said Sunday, after rebels and NATO dismissed an offer for talks to end Libya\'s crisis.

A group of Libyan rebels prepare to go on patrol near the airport at al-Ghiran, close to the key port city of Misrata.

The house of Seif al-Arab Kadhafi, 29, "was attacked tonight with full power," government spokesman Moussa Ibrahim told a news conference after the late Saturday strikes in confirming the deaths.

The Libyan strongman and his wife were in the building when the strike hit, but were not harmed, though other friends and relatives were injured in what Ibrahim deemed "a direct operation to assassinate the leader of this country."

"The attack resulted in the martyrdom of brother Seif al-Arab Moamer Kadhafi, 29 years old, and three of the leader\'s grandchildren," he added.

"The leader himself is in good health; he wasn\'t harmed. His wife is also in good health; she wasn\'t harmed, (but) other people were injured."

No independent confirmation of the incident was immediately available.

Automatic gunfire, apparently in mourning, echoed across the capital following the announcement.

Overjoyed rebels fired rockets, Kalashnikovs, TNT and 12.5 anti-aircraft machine guns for more than a half an hour, rocking the rebel capital of Benghazi with sustained gunfire and explosions to mark the moment.

"They are so happy that Kadhafi lost his son in an air strike that they are shoooting in celebration," said Colonel Ahmed Omar Bani, military spokesman of the Libyan opposition Transitional Nation Council (TNC) headquartered in the eastern city.

Cars whizzed by the seafront beeping their horns as people shouted "God is greatest" below a night sky lit up by red tracer fire.

Ibrahim had earlier taken journalists to the remnants of a heavily damaged house in Tripoli, hinting but not explicitly indicating this was the one in which Kadhafi\'s son had died.

Given the level of destruction, it was unclear that anyone could have survived, raising the possibility that if Kadhafi was there, he had left beforehand.

Three loud explosions were heard in Tripoli on Saturday evening as jets flew overhead.

In an early Saturday speech on state television, Kadhafi had said NATO "must abandon all hope of his departure.

"I have no official functions to give up: I will not leave my country and will fight to the death," he said.

But he added a conciliatory note: "We are ready to talk with France and the United States, but with no preconditions.

"We will not surrender, but I call on you to negotiate. If you want petrol, we will sign contracts with your companies -- it is not worth going to war over.

"Between Libyans, we can solve our problems without being attacked, so pull back your fleets and your planes," he told NATO.

His call was dismissed by the TNC, which has shaped itself into a parallel government in Benghazi, and by NATO.

"The time for compromise has passed," said TNC vice chairman Abdul Hafiz Ghoga.

"The people of Libya cannot possibly envisage or accept a future Libya in which Kadhafi\'s regime plays any role."

In Brussels, a NATO official also rejected talks.

"We need to see not words but actions," the official told AFP.

UN Security Council Resolution 1973, which authorized military action against Kadhafi\'s forces, "explicitly calls for an end to attacks on and abuses of civilians," the official said.

"The regime has announced ceasefires several times before and continued attacking cities and civilians."

The regime threatened to attack any ships trying to enter the rebel-held port of Misrata, after tanks launched an assault on the city east of Tripoli.

Misrata\'s port is a crucial conduit for humanitarian aid to the city of half a million, which Kadhafi\'s forces have been trying to capture for more than seven weeks.

The fighting in Misrata has intensified 10 weeks after government forces launched a deadly crackdown on protests inspired by regime-changing movements in Tunisia and Egypt.

An AFP correspondent there said 10 people had been killed and 20 wounded by mid-afternoon, with witnesses saying as many as five tanks were seeking to advance on the city from the airport.

Loyalist forces were pushed back from Misrata by the rebels and NATO air strikes on Monday, with the rebels saying they had secured the port and their next objective was the airport.

But state television said the military had "put the port out of service," and that delivery of humanitarian aid to Misrata should now be carried out "overland and under the supervision of the armed forces."

British Brigadier Rob Weighill, director of NATO operations in Libya, said NATO warships stopped Kadhafi forces from laying mines in Misrata harbour on Friday.

"Our ships intercepted the small boats that were laying them and we are disposing the mines that we found," Weighill said at his headquarters in Naples, Italy.

"It again shows his complete disregard for international law and his willingness to attack humanitarian delivery efforts," he said of Kadhafi.

In Benghazi, rebels said loyalists had stormed the eastern oasis town of Jalo, several hundred kilometres south, and killed five people.

"It seems Kadhafi is trying to open another front in the south," said a rebel source, while TNC spokesman Jalal al-Gallal worried that the attack was "not a great sign."

The rebels said the troops that entered Jalo were the same ones that on Thursday swept into Kufrah, which lies hundreds of kilometres farther south.

Kufrah is the main city in Kufrah province, which lies in the southeastern corner of the country, bordering Chad, Sudan and Egypt.

In Tripoli, volleys of anti-aircraft fire rang out after the first two explosions Saturday night, which were followed by a third blast from the same direction.

Mohammed al-Mehdi, the head of the Civil Society Council, whose office was damaged in an air strike in Tripoli, said three guards were wounded in the explosion on Saturday morning.

A school for children with Downs Syndrome, which adjoins the area of the building that was destroyed, was also damaged.

In western Libya, NATO said its warplanes would focus on regime forces threatening the towns of Zintan and Yefren, scenes of heavy fighting.

Meanwhile, rebels were expecting a new Kadhafi offensive for control of the Dehiba border crossing into Tunisia, witnesses said on Saturday, a day after they retook it from loyalists in fierce fighting.