Rebel forces are reported to be pushing towards Gaddafi's hometown of Sirte as the dictator manages to evade fighters despite rebels seizing the capital and a £1m reward being offered for his capture.

Mustafa Abdel Jalil, head of the National Transitional Council, said he supported the offer by businessmen in the country to pay two million Libyan dinars for the fleeing dictator.

Jalil said that amnesty would be offered to any of Gaddafi's "close circle" who "kill him or capture him".

The offer came as the Daily Telegraph reported that SAS soldiers dressed in Arab clothing are participating in the hunt for Gaddafi, under orders from Prime Minister David Cameron.

Defence Secretary Liam Fox refused to confirm that the SAS were involved directly, but admitted that Nato is helping the rebels to look for the ousted dictator.

Fox told Sky News: "I can confirm that Nato is providing intelligence and reconnaissance assets to the NTC to help them track down Colonel Gaddafi and other remnants of the regime."

Foreign Secretary William Hague said he believed forces loyal to Gaddafi remained in the south of Libya particularly around Sirte.

"As long as that remains the case, they remain a threat to the civilian population, then the Nato operations will continue, so this is not over yet, the regime is finished but fighting in Libya as everybody can see from their television screens is not over yet," he told a press conference.

The search for the increasingly estranged dictator continues as the National Transitional Government moves towards a full take-over of power.

French President Nicolas Sarkozy has announced a meeting which will take place on Thursday next week in Paris between the National Transitional Council, the Nato countries who supported the rebel offensive, China, Russia, India and Brazil, to discuss the country's future.

In London a No. 10 spokesman told the Press Association: "We have stood firmly by the Libyan people since their uprisings began six months ago and we will continue to lead international efforts to help them achieve their aspirations in the weeks and months ahead."

But Mahmoud Jibril, head of the NTC cabinet, said his council would not be able to realise its aim without funding during a press conference with Italian Prime Minister Silvio Berlusconi.

"We are telling our friends the biggest destabilising element would be the failure of the TNC to deliver services to the people and not pay salaries, which have not been paid for almost three months.

"If we don’t receive this assistance the situation in Tripoli and other parts of the country will be beyond control."

Meanwhile fighting has continued in Tripoli and other parts of Libya as rebel forces attempt to assert their dominance.

The four Italian journalists who were reported to have been abducted after their was driver killed West of Tripoli on Wednesday were freed. The BBC said that the reporters were released after a raid on the house in the capital where they were being held.

Also in Tripoli, footage emerged of what appeared to be the liberation of the city's notorious top-security Abu Salim prison.

On Twitter Al Jazeera journalist James Bays reported he had seen evidence of a "mass execution" at the Bab al Aziziya compound by forces loyal to Gaddafi.

Bays said that a prisoner at the compound told him how loyalist soldiers had sprayed cells with bullets as the compound came under attack.

Jeffery Cofman with ABC news said that he had seen no evidence of looting or other disorder. "As we drive through Tripoli, impressive to see virtually no looting. No police, but so far order prevails," he said via Twitter.

A Dutch broadcaster posted footage online of a hanger filled with tanks and other military vehicles apparently abandoned by the Gaddafi regime, and Al Jazeera broadcast pictures from inside Gaddafi's underground military bunker.

There were also growing concerns for the humanitarian situation in Tripoli. Teams from various international organisations were said to be preparing to send and distribute aid in the country, including the Red Cross and the European Union.

Elsewhere in Libya, loyalist Gaddafi troops had reportedly been shelling cities in the south of the country in an apparent attempt to regain some momentum after days of crushing defeats.