US President Barack Obama has said he does not rule out arming the rebels seeking to overthrow Libyan leader Colonel Muammar Gaddafi.
He said in an interview that Col Gaddafi had been greatly weakened and would ultimately step down.
Pro-Gaddafi forces have driven the rebels back tens of kilometres over ground they took in recent days after coalition air strikes.
The rebels have now retreated eastwards past the town of Ras Lanuf.
News of the rebel withdrawal came as an international conference on Libya in London agreed to set up a contact group involving Arab governments to co-ordinate help for a post-Gaddafi Libya.
At least several thousand people have been killed and thousands wounded since the uprising against Col Gaddafi's rule began more than six weeks ago, with the rebels now controlling much of the east and pro-Gaddafi forces holding the capital Tripoli and other western cities.