TRIPOLI - Muammar Gaddafi is in a desert town outside Tripoli planning a fight-back, a Libyan military chief said on Thursday, as Libya's interim rulers met world leaders to discuss reshaping the nation.

The ruling National Transitional Council (NTC), trying to mop up pro-Gaddafi forces, extended by a week a deadline for the surrender of the coastal city of Sirte, a spokesman said.

The council had given Sirte, Gaddafi's birthplace and other areas still loyal to him, until Saturday to surrender or face a military assault.

The extension of the ultimatum follows a peace feeler from one of Gaddafi's sons, Saadi.

"We were talking about negotiations based on ending bloodshed," Saadi, whose whereabouts are not clear, said on al-Arabiya television on Wednesday, adding his father had authorised him to parley with the NTC.

The head of Tripoli's military council, Abdul Hakim Belhadj, told Reuters the same day he had spoken to Saadi by telephone and promised him decent treatment if he surrenders.  

But Gaddafi's better-known son Saif al-Islam, in a statement on a Syrian-owned TV channel, promised a war of attrition until Libya was cleansed from "gangs and traitors".

Mystery still surrounds Gaddafi's whereabouts, with an NTC commander saying he is in Bani Walid and an Algerian newspaper reporting him in the border town of Ghadamis.

Abdel Majid Mlegta, coordinator of the Tripoli military operations room, told Reuters "someone we trust" had said Gaddafi fled to Bani Walid, 150 km (95 miles) southeast of the capital, with his son Saif al-Islam and intelligence chief Abdullah al-Senussi three days after Tripoli fell last week.