Libyan provisional government fighters, backed by NATO, are attempting to oust Moammar Gadhafi's loyalists from one of their last remaining strongholds.

The fighters encountered stiff resistance from loyalists in the desert town of Bani Walid on Saturday, a day after they pushed into the town.

Fighters have been conducting door-to-door raids for snipers, while NATO jets have provided air support.

A VOA correspondent ) near Bani Walid said heavy artillery fire could be heard from the scene.

The National Transitional Council said its fighters moved on Bani Walid, Friday, after loyalists fired a barrage of rockets at their positions on the outskirts of the town.

The NTC had earlier set a Saturday deadline for Mr. Gadhafi's forces to surrender in several remaining towns, including Bani Walid and his hometown of Sirte. Sporadic clashes were reported in Sirte late Friday and early Saturday.

Meanwhile, the International Monetary Fund has joined other world bodies and recognized the NTC as Libya's official government.

The group announced its decision at a Saturday meeting in France, where international financial institutions promised an additional $38 billion for four Arab countries that are trying to transition to democracy.

Interpol issued an arrest warrant for Mr. Gadhafi, his son Saif al-Islam and Libya's former intelligence chief on Friday.

The international police agency said it issued a “red notice” calling on all countries to help locate the three men and place them under arrest. Their current whereabouts are unknown.