Protesters out on the streets of Tripoli late on Sunday were met by security forces using live ammunition and tear gas.
Benghazi, the country’s second city, now appears to be largely under the control of protesters.
But Col Gaddafi’s son, Saif al-Islam, has warned that civil war could ignite.
In a lengthy TV address, he offered significant political reforms but also vowed that the regime would “fight to the last bullet” against “seditious elements”.
He acknowledged, though, that the eastern cities of Benghazi and al-Bayda had fallen to the opposition.
‘Massacre’
On Monday, reports from Tripoli suggested the streets were mainly quiet, with government forces still patrolling Green Square after crushing protests in what witnesses called a “massacre”.
It followed a night of violence between supporters of Col Gaddafi and anti-government protesters.
The situation in Libya is becoming increasingly confused and chaotic. There are several reports that Col Gaddafi has now left Tripoli, possibly for his hometown of Sirt or his desert base of Sabha.
In Tripoli itself, elements of the security forces are still on the streets, though the violence seems to be increasingly random.
During the night, there were more brutal attacks on demonstrators who had gathered, after rumours spread that Col Gaddafi had fled the country.
Hour by hour, there are reports of more defections. Almost all major tribal leaders seem to have joined the opposition, as well as important religious leaders and several senior Libyan ambassadors.
The east of the country is already almost entirely out of the hands of the government. Col Gaddafi’s hold on power is becoming weaker by the hour.
Gunfire was heard into the early hours of the morning and firefighters struggled to contain a fire at a central government building, the People’s Hall, which was earlier set ablaze.
Libya’s envoy to the Arab League, Abdel Moneim al-Honi, announced he was “joining the revolution” and its ambassador to India, Ali al-Essawi, told the BBC he was resigning in protest against his government’s violent crackdown on demonstrators.
Mohamed Bayou, who until a month ago was chief spokesman for the Libyan government, said the leadership was wrong to threaten violence against its opponents.
“I hope that [Col Gaddafi’s son Saif] will… change his speech to acknowledge the existence of an internal popular opposition, to enter into dialogue with them regarding thorough changes in the Libyan system,” Mr Bayou said in a statement obtained by the Reuters news agency that appeared to indicate disagreement within the ruling elite.
In another blow to Col Gaddafi’s rule, two tribes – including Libya’s largest tribe, the Warfla – have backed the protesters.
More violence ahead?
With Tripoli in ferment, the government has already lost control of much of the east of the country, says the BBC’s Jon Leyne in neighbouring Egypt.
It is beginning to look like just a matter of time before Col Gaddafi’s rule finally collapses, adds our correspondent. However, Libyans are worried about how much more violence lies in store in the days ahead.
Human Rights Watch says at least 233 people have died since last Thursday, though in his speech, Saif al-Islam insisted reports of the death toll had been exaggerated.
The US, UK and French governments are among those which have condemned the harsh treatment of protesters.
Italian Foreign Minister Franco Frattini said the EU needed to formulate a comprehensive action plan – a “Marshall Plan for the Mediterranean and Middle East” – adding that he was particularly worried about Libya collapsing and being supplanted by an Islamic state.
“Would you imagine to have an Islamic Arab Emirate at the borders of Europe? This would be a very serious threat and that’s why we consider Libya one of the areas to be taken into full consideration,” said Mr Frattini.
The head of the Arab League, Amr Moussa, described the protesters’ demands as legitimate.
“The demands of the Arab peoples for reform, development and change are legitimate and… the feelings of all the (Arab) nations are joined in this decisive moment in history,” he said.
Meanwhile, at least four foreign workers were injured when several hundred protesters stormed a construction site west of Tripoli.
A spokesman for the South Korean-run site said computers and heavy machinery were stolen.
A Bangladeshi worker in the port city of Darnah, east of Benghazi, told the BBC around 2,500 foreign workers had been placed under house arrest by anti-government protesters who were in control of the area.
The violence has helped to push up oil prices to their highest levels since the global financial crisis of 2008.
At one point, Brent crude – one of the main benchmarks on world oil markets – reached $105 (£65) a barrel.