Militant fighters overran a Libyan special forces base in the eastern city of Benghazi on Tuesday after a battle involving rockets and warplanes that killed at least 30 people.
Meanwhile, as the fighting between militias loyal to the Libyan government and Islamist forces escalates, India faces a tough diplomatic job to ensure the safe return of close to 6,000 Indian nationals stuck in the strife-torn country.
Among those caught in the conflict, in parts of Tripoli and Benghazi in eastern Libya, are some seven Indian nurses, mostly from Kerala.
Libyan special forces officer Fadel Al-Hassi said the militants had to abandon their main camp in the southeast of Benghazi after coming under sustained attack from a coalition of Islamist fighters and former rebel militias in the city.
"We have withdrawn from the army base after heavy shelling," he said.
Intense fighting in Benghazi, Libya's second city, and battles between rival militias in the capital Tripoli have pushed the nation deeper into chaos after two weeks of the fiercest violence since the civil war which ousted Muammar Gaddafi in 2011.
Benghazi has been at the centre of fighting between special forces and ex-rebel fighters of the Benghazi Shura Council who have joined up with the Ansar al Sharia, a militant Islamist group.
Ansar al Sharia, classified as a terrorist organisation by Washington, has been blamed by authorities for attacking the US consulate in Benghazi in 2012 when the ambassador was killed.
Special forces and some regular air force units had recently joined forces with a renegade former army general, Khalifa Haftar, who had launched a self-declared campaign to clear the city of Islamist militants.