AJDABIYA, Libya - Troops loyal to Libyan leader Moammar Gadhafi on Sunday shelled the rebel-held city of Ajdabiya, a strategic eastern town that has been the scene of fierce fighting in recent weeks.

The government bombardment of Ajdabiya marked a setback for the rebels, who were forced to retreat a day after having advanced as far as the outskirts of the oil town of Brega, about 60 miles (100 kilometers) to the west.

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On Sunday, dozens of vehicles, some of them rebel trucks with heavy machine guns mounted in the back, could be seen fleeing Ajdabiya toward the rebel stronghold of Benghazi, about 100 miles (160 kilomters) to the north.

Last month, Gadhafi's troops encircled Ajdabiya with tanks, armored personel carriers and heavy artillery before NATO airstrikes decimated the forces beseiging the city and allowed the rebels to reclaim the town and push west.

The NATO-led air campaign has kept rebels from being defeated on the battlefield by the better trained and equipped government forces, but it still has not been enough to completely turn the tide. The rebels have been unable to reach Gadhafi's heavily defended hometown of Sirte, the gateway to the regime-controlled western half of the country.

Rebel advances west of Ajdabiya - through Brega and its companion oil center of Ras Lanouf, another 60 miles (100 kilometers) farther on - have ultimately foundered as rebels overextended their supply lines and were routed by the heavier firepower and more sophisticated tactics of the government forces.

But while Gadhafi's troops have been able to halt rebel advances and push back east, they have been unable to move in on Benghazi.