Libyan rebels claimed victory Saturday over the western port city of Misurata, which has been a deadly battleground for nearly two months.
Libyan troops captured by rebels told Reuters they were leaving the city after an order to retreat.
"We have been told to withdraw. We were told to withdraw yesterday," army soldier Khaled Dorman said.
A rebel spokesman told Reuters that Gaddafi's forces left the city but remained on the outskirts, ready to attack it.
A top Libyan official told AP Friday that troops would be withdrawn from the city, and the fight would be left to local tribes.
The Libyan deputy foreign minister acknowledged that the NATO air strikes had taken their toll, Al Jazeera reports.
"The tactic of the Libyan army is to have a surgical solution, but it doesn't work, with the air strikes it doesn't work," Khaled Kaim said in the capital, Tripoli. "The situation in Misurata will be eased, will be dealt with by the tribes around Misurata and the rest of Misurata's people and not by the Libyan army."
Hundreds of civilians have been killed in Misurata since the fighting began in late February. The city has seen some of the fiercest attacks by Gaddafi's forces, including the use of cluster bombs in civilian areas.
The dead have included Tim Hetherington, who co-directed the Oscar-nominated documentary film "Restrepo," and fellow photojournalist Chris Hondros, who were killed in a mortar attack Wednesday.
The retreat of Gaddafi's forces have caused mixed reactions in Misurata, Al Jazeera reports.
"We don't believe anything that Gaddafi's people say. Just listen to the sounds of the mortars … they're lying," Mustafa bin Sweid, a doctor at a Misurata hospital, said.
Before Gaddafi's forces retreated from the city, they left booby-traps, rebels told Reuters.
"One man was opening his fridge when he went to his house after the Gaddafi forces left it this morning and it blew up in his face. Bodies the same. When the rebels are trying to lift a body it blows up," said rebel spokesman Gemal Salem.
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