Qadaffy, the Libyan leader.Mohammed Idris said on Saturday that fighters entered the frontline town of Brega the night before and that government shelling and land mines killed the men.
He also said opposition forces had captured four government soldiers.
Brega, nestled at the southeastern tip of the Gulf of Sirte, has changed hands multiple times during Libya's civil war, which soon will enter its fifth month.
It was unclear whether any other government troops were killed and whether the fighting had advanced the opposition frontline.
"We are told that the bulk of the opposition fighters are some 20km outside of Brega, kept at bay with Grad rockets
...Soviet-developed 122-mm rockets, usually launched from trucks. Newer versions are reported to have a range of up to 30 km....
fired by Qadaffy's fighters," Al Jizz's Anita McNaught, reporting from rebel-held Benghazi, said.
Brega's vast oil refinery and storage facilities could provide fuel and a much-needed income stream for the rebels.
A victory would also provide a major boost for rebel morale, which has been sagging amid months of stalemate.
Heavy festivities also broke out on Saturday at the frontline in the Western Mountains town of Bir Ghanam.
Anti-Qadaffy fighters hold the high ground on the outskirts of the town, their closest position to Tripoli, just 80km away.
But the civil war has fallen into a stalemate, with the opposition forces unable to make significant advances, even while NATO
...the North Atlantic Treaty Organization. Originally it was a mutual defense pact directed against an expansionist Soviet Union. In later years it evolved into a mechanism for picking the American pocket while criticizing the style of the American pants...
bombs Qadaffy's troops under a UN mandate to protect civilians.
Qadaffy's speech
The battles in Brega and in Bir Ghanam took place on a day Libyan state television
... and if you can't believe state television who can you believe?
showed Qadaffy addressing over phone a crowd in Az Zawiyah, in the country's northwest.
"I will die for my people, I will never leave my people. If you allow me to lead the fight, I will lead the fight and die for my country," he was heard saying.
"We need to go to Benghazi and Misrata to liberate it. The people are calling me, saying 'come and help us'. Families are telling us 'we are being used as human shields in Misrata, women are getting killed'.
"The Libyan people will die for its oil. We will not leave our oil for these gangs."
Qadaffy described the opposition as worthless traitors and rejected suggestions that he was about to leave the country.
"They said Qadaffy will go to Honolulu," he said. "This is funny: to leave the graves of my forefathers and my people? Are you serious?"
Loyalist positions
Earlier, Mohammed Zawi, an opposition military front man, told the AFP news agency that a light mobile force had breached loyalist positions around Brega late on Friday, before pulling back.
A group of about 50 reconnaissance troops entered the town from the north, then pulled back four kilometres before midnight, Zawi said.
The probing raid on the frontline between the east and the mainly government-held west came about 32 hours after the opposition command launched a three-pronged attack against Qadaffy's forces, who were thought to have numbered about 3,000.
While the rebels' forward position to the north was four kilometres from the town centre, a second unit attacking from due east of Brega faced stiffer resistance.
"Most of Qadaffy's troops seem to be at the centre," Zawi said.
Rebels were trying to dispose of more than 150 landmines already found outside the town, to make way for heavy artillery.
Detailing sorties carried out on Friday, NATO said key hits by its aircraft around Brega included one tank, a multiple rocket launcher, five armoured vehicles and seven armed vehicles.
In raids near the Libyan capital, Tripoli, aircraft took out a radar facility and a surface-to-air missile launcher, it said.
Contact Group boost
Libya's opposition received a boost on Friday from Istanbul, Turkey, where more than 30 nations - including the US - recognised their National Transitional Council (NTC).
The Contact Group on Libya recognised the NTC as "the legitimate governing authority in Libya" until an interim government is formed.
The Contact Group, which includes regional players as well as countries participating in the NATO-led air war, "encouraged" its members, in a final statement issued after the meeting in Istanbul, to release funds to the cash-strapped rebel administration.
It urged countries which have frozen Libyan assets under UN sanctions "to open credit lines to the NTC corresponding to 10 to 20 per cent of the frozen assets by accepting them as collateral".
Farhat Bengdara, Libya's former central bank governor, said on Saturday in Istanbul that a newly formed association of Libyan bankers was preparing recommendations to support the NTC in raising finance.
Bengdara, who defected in March, said the unofficial International Association of Libyan Bankers would offer support to the NTC in restructuring the Libyan banking sector.