TRIPOLI, Libya - Libyan representatives are ready to hold more talks with the United States and with rebels hoping to push Muammar Gadhafi from power, but Gadhafi will not bow to demands he leave power, a government spokesman said.

Government spokesman Moussa Ibrahim said that senior Libyan officials had a 'productive dialogue' with US counterparts last week in a rare meeting that followed the Obama administration's recognition of the rebel government that hopes to end Gadhafi's 41-year rule.

"We believe other meetings in the future ... will help solve Libyan problems," Ibrahim told reporters in Tripoli on Friday. "We are willing to talk to the Americans more."

As Gadhafi clings to power despite five months of civil conflict and a lengthening NATO bombing campaign, the West is increasingly hoping for a negotiated settlement to the Libyan conflict.

While the United States, NATO's dominant military power, is hoping that talks can gain traction, it along with the rebels that now control roughly half of Libya insists Gadhafi must go.

Ibrahim said Libyan officials? but not Gadhafi himself? would be willing to hold further meetings with rebels. But such talks will only take place on the government's terms, he said, as it urges them to put down their arms and rejoin the Gadhafi camp.

"Nations do not negotiate with armed gangs," Ibrahim said. Gadhafi is urging Libyans, however, to persuade rebels to disarm ?and to fight them if they don't.

The comments came as the Libya reported a NATO airstrike near the eastern oil hub of Brega, the scene of recent fighting, which the government said killed six guards at a water pipeline plant. The report could not be immediately verified.

As Western nations intensify diplomatic efforts to foster an exit from the conflict, a European diplomat said that a UN envoy will seek to persuade warring parties in Libya to accept a plan that envisages a ceasefire and a power-sharing government, but with no role for Gadhafi.

The diplomat said the informal proposals would be canvassed by the special UN envoy to Libya, Abdul Elah al-Khatib, who has met both government and rebels several times.

Khatib, a Jordanian senator, told Reuters in Amman he hoped both sides would accept his ideas.

"The UN is exerting very serious efforts to create a political process that has two pillars; one is an agreement on a ceasefire and simultaneously an agreement on setting up a mechanism to manage the transitional period," he said. He did not go into the details of that mechanism.

TOUGH FIGHT

Poorly armed rebels seem unlikely on the cusp of the Islamic holy month to quickly unseat Gadhafi, who came to power himself as a young revolutionary influenced by Egypt's Gamal Abdel-Nasser.

The rebels declared advances this week but they also suffered losses near their stronghold of Misrata and in fighting for Brega.

On Thursday rebels said minefields slowed their advance on Brega - which they had earlier claimed to have all but captured - but that they had pushed closer to Zlitan, on the Mediterranean coast 160 km (100 miles) east of Tripoli.

A rebel spokesman near Zlitan called urgently for help for people in nearby Souk al-Thulatha who joined the rebels but were now besieged by government forces. "This is very dangerous for the course of the revolution," he wrote in an online posting.

Gadhafi has stepped up his defiant rhetoric amid persistent reports of talks. Pro-government rallies are being shown almost daily on state television, perhaps a reminder to outsiders that he can still command considerable support. On Friday, thousands of people gathered near Tripoli's historic centre to watch the unveiling of a massive likeness of the longtime leader.

State television said Gadhafi would make another speech on Saturday, this time addressed to Egyptians on the anniversary of their revolution - not this year's, which toppled President Hosni Mubarak, but pan-Arabist Nasser's in 1959.

Despite facing a rebel challenge and ostracized by much of the international community, the government remained potent, Ibrahim said.

"NATO, you are losing, you will lose," he said. "The armed gangs in the western mountains and the east part of the country, you have no future (in the country). Admit it."

Ibrahim also denied a report from rebel foreign spokesman Ali Essawi that Mansour Daw, a key aide to Gadhafi, had been wounded in a rebel rocket attack on a meeting of Gadhafi's inner circle in Tripoli on Thursday. Ibrahim said there had been an explosion caused by a kitchen gas cylinder.

Hopes for a negotiated settlement are growing as Europe and the United States grapple with fiscal crises at home. This week, France said for the first time that Gadhafi could stay in Libya as long as he gives up power.

But there is little evidence in Libya that either side is ready to make serious concessions.

"The first principle for Libyans is that Gadhafi should step down, and announce this and make this very clear. After that, we can talk about details," Essawi told reporters in Rome. "Negotiations will be only on the departure of Gadhafi. We will not negotiate on his staying in Libya or ruling the Libyans."

Ibrahim meanwhile reiterated that Gadhafi would not leave his position nor leave Libya on demands from rebels or from NATO.

Complicating Gadhafi's situation is the fact that the world court in The Hague which seeks his arrest over crimes against humanity allegedly committed by his forces, he added.

As the war in Libya drags on, the US military is weighing options that may deepen its involvement in the conflict and its alliance with the rebels.

A US official said on Friday that the United States is considering a NATO request to send more Predator drones to Libya, as well as other surveillance aircraft. It has also reopened a debate over arming the rebels, the official said, speaking on condition of anonymity.