Groups fighting to oust the Libyan leader Muammar Gaddafi have seized the city of Zawiya, 50km from the capital, Tripoli.
Also on Sunday, the United Nations Security Council imposed travel bans and asset freezes on Colonel Gaddafi, and members of his family and inner circle.
The Libyan government took journalists to Zawiya on Sunday morning.
The BBC reports that instead of a show of government force, reporters saw opposition fighters manning the barricades in the city centre and flying their flag.
Tripoli remains in the control of Col Gaddafi, who is facing the biggest challenge to his 41-year rule.
Pro-Gaddafi forces are encircling Zawiya, which saw fierce fighting last week.
But a BBC producer on the government-organised trip says the opposition has control of the centre, where hundreds of demonstrators have gathered.
Some of them are firing weapons into the air, saying they are protesting peacefully but are ready to fight, the reporter adds.
In a televised speech on Thursday, Col Gaddafi addressed the people of Zawiya, saying young people were being duped with drugs and alcohol to take part in "destruction and sabotage".
The unanimous vote at the UN Security Council meeting also approved referring the Libyan regime to the International Criminal Court for alleged abuses during the current violence.
The UN estimates more than 1000 people have died in the revolt against the country's leadership.
A transitional government for Libya is reportedly being formed in Benghazi.
The former justice minister, Mustafa Abdel-Jalil, says the body will prepare for elections in three months and will have both military and civilian members.
The Tripoli airport is chaotic, with thousands of people trying to leave the country.
Concern is growing internationally about a growing number of refugees and displaced people from Libya.
The United Nations' secretary general Ban Ki Moon told the Security Council that 22,000 people have fled to Tunisia and another 15,000 to Egypt.
Stand down, says Obama
United States President Barack Obama has for the first time said Colonel Gaddafi should step down and leave the country now.
He made his position clear in a call with German Chancellor Angela Merkel, the White House says.
The president says when a leader's only means of staying in power is to use mass violence against his own people he has lost the legitimacy to rule.
On Friday the United States said it would soon impose sanctions on Libya and bluntly said Gaddafi's legitimacy had been reduced to zero.
And the British Foreign Secretary William Hague has said "it is time" for Col Gaddafi to step down.
His comments came after the airlift of 150 oil workers, many of them British, from desert camps in Libya. About 300 British nationals remain stranded.
Speaking on the BBC, Mr Hague said: "Of course, it is time for Colonel Gaddafi to go, that is the best hope for Libya."