Several senior officials – including the justice minister – have reportedly quit their posts after security forces fired on the Tripoli protesters.
In a TV address, Col Gaddafi’s son, Saif al-Islam, conceded that protesters had taken over eastern cities of al-Bayda and Benghazi.
But he warned of civil war and vowed to “fight to the last bullet”.
The BBC’s Jon Leyne, in neighbouring Egypt, says Col Gaddafi has now lost the support of almost every section of society.
Reliable sources say Col Gaddafi has now left the capital, our correspondent adds.
‘Hatred of Libya’
On Monday, state TV reported an operation had been mounted against the Tripoli protesters.
“Security forces have started to storm into the dens of terror and sabotage spurred by the hatred of Libya,” Libyan TV reported.
Unconfirmed reports suggested soldiers were once again using live ammunition in the capital on Monday evening.
Security forces fired live rounds and tear gas to disperse protests on Sunday night.
Justice Minister Mustapha Abdul Jalil became the latest senior official to resign, saying he was leaving his post because of the “excessive use of violence”, privately owned Quryna newspaper reported on Monday afternoon.
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 also resigning.
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.
Mr Bayou, in a statement quoted by the Reuters news agency, called on Saif al-Islam to acknowledge the opposition and open dialogue with them.
In another blow to Col Gaddafi’s rule, two tribes – including Libya’s largest tribe, the Warfla – have backed the protesters.
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Libya Protests: Col Gaddafi Under Mounting Pressure