The rebels seized Al-Rayaniya, a village east of the heavily fought-over hilltown of Zintan in the mainly Berber Nafusa mountains, southwest of Tripoli, an AFP correspondent reported.
The village of some 10,000 residents is located on a strategic route connecting Zintan and Yefren, two towns rebels hope to wrest from forces loyal to Moamer Kadhafi.
Pro-Kadhafi forces, however, continue to bomb the town with Grad rockets. Two rebels were killed in the fighting and about a dozen wounded.
In Tripoli, blasts were heard around 11:30 pm (2130 GMT), and witnesses reported seeing black smoke rising from a site close to downtown.
Libya's official agency Jana reported that civilian sites in the Al-Ferjan district had been the target of NATO, the "colonialist, crusader aggressor," and that the attacks had set civilian homes on fire. Several people had been injured it added, without elaborating.
The Libyan capital and its suburbs have been the target of almost daily NATO air raids since it started its military operation on March 31, a month after the uprising against Kadhafi.
In Washington, US politicians grew impatient with the pace of operations: Republican US House Speaker John Boehner gave Obama until Friday to ask Congress to authorize military action "or withdraws all US troops and resources from the mission."
Boehner warned Obama that the administration may fall afoul, as of Sunday, of a 90-day deadline set by the 1973 War Powers Act aimed at curtailing US presidents' ability to deploy the military overseas.
The Act allows the president to use force in response to an attack on the United States, its territories, or its armed forces, but calls for notifying congress within 48 hours and says US troops must start to withdraw 60-90 days later unless specifically authorized to remain by lawmakers.
The US Constitution reserves to congress the right to declare war, though US presidents have often deployed forces without first getting lawmakers' explicit approval and ignored the war powers measure.
Polls show the conflict is overwhelmingly unpopular with the US public.
NATO, which is in charge of western military operations in Libya, on Tuesday said it "has the resources" to conduct its campaign despite a warning from Washington that reliance on US military could jeopardise the mission.
"We continue to maintain a high tempo of operation," said NATO spokeswoman Oana Lungescu. "It is clear that NATO has the resources to keep up the pressure on the (Moamer) Kadhafi regime. We know it takes time."
But French General Stephane Abrial, the Supreme Allied Commander of Transformations, warned that the issue of resources "will become critical" if the conflict dragged on.
"If the operation was to last longer, of course the resource issue will become critical," Abrial said.
Libyan rebels made an important diplomatic gain Tuesday when Canada recognized them as the "legitimate representative" of the people of Libya. Canadian lawmakers also voted almost unanimously to extend the country's military mission under NATO's umbrella until September.
Soon after Panama became the 15th country and the first in Latin America to recognize the rebels as the legitimate representative of the Libyan people. President Ricardo Martinelli made the announcement after welcoming two rebel representatives to the presidential palace.
Libya's foreign ministry meanwhile said Monday's visit by German Foreign Minister Guido Westerwelle to Benghazi, the rebels' de facto capital, was a "flagrant violation" of Tripoli's sovereignty.
It condemned the trip as "irresponsible" and said it "does not help efforts by regional and international organisations to find a peaceful solution to what is happening in Libya."
Liberia on Tuesday broke diplomatic ties with Libya one day after US Secretary of State Hillary Clinton pressed all African states to demand Kadhafi step down and take tougher action against his regime.
Senegal and Gambia are the only African states to have recognised the rebels as the legitimate interlocutors.
South African President Jacob Zuma on Tuesday said NATO's air campaign abused a UN resolution to protect Libyan civilians for regime change and "political assassinations".
"We strongly believe that the resolution is being abused for regime change, political assassinations and foreign military occupation," Zuma said in a speech to parliament.
He added NATO's actions undermined African Union efforts to find a solution.
