Fierce battle under way in Kadhafi last bastion: AFP

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Fierce street fighting erupted on Tuesday between new regime fighters and Muammar Gaddafi's remaining diehards in Sirte, the toppled Libyan leader's last bastion, media reported.

National Transitional Council fighters suffered dozens of injuries and at least two deaths within the first 40 minutes of the battle exploding mid-morning, with the streets reverberating with the sound of heavy gunfire, rockets and mortars.

They were seen running in their hundreds through the streets of the last two neighbourhoods still in the hands of the loyalists, the Dollar and Number Two.

Pickup trucks brought the wounded back to a field hospital opened on the edge of the neighbourhood, with the AFP reporter counting at least 35 injured.

The bodies of two fighters hit directly with mortars were brought to the clinic wrapped in blankets, which were still smouldering.

"They are shooting at us from everywhere, with snipers, mortars and RPGs," said one fighter, Tahar Burzeza. "It is brutal inside. We are being shot from everywhere."

The Mediterranean city of Sirte is the last stronghold of Kadhafi loyalists after the desert oasis of Bani Walid was overrun by NTC fighters on Monday.