A jet appears to have been shot down over the city in spite of a declared ceasefire and a UN no-fly resolution.
World leaders are due to meet in Paris to discuss military action.The rebel leader has appealed to the international community to stop the pro-Gaddafi bombardment, but the government denies claims of attacks.
“Now there is a bombardment by artillery and rockets on all districts of Benghazi,” Mustafa Abdul Jalil told Al Jazeera television. “There will be a catastrophe if the international community does not implement the resolutions of the UN Security Council.
“We appeal to the international community, to the all the free world, to stop this tyranny from exterminating civilians.”
UN Secretary General ban Ki-moon says the world must “speak with one voice” on Libya.
The new UN resolution authorised “all necessary measures” to protect Libyan civilians.
Our correspondent saw the government tanks on a bridge inside Benghazi at around 1030 (0830 GMT), and reports suggested hundreds of people were fleeing the city eastwards as the fighting continued.
Earlier, US President Barack Obama said forces loyal to Col Muammar Ghaddafi must stop attacking rebel areas or face military action.
“Gaddafi must stop his troops from advancing on Benghazi, pull them back from Ajdabiya, Misrata and Zawiya and establish water, electricity and gas supplies to all areas,” he said on Friday.
Shortly after 0900 a fighter jet was hit – it is unclear by what, and we don’t know who it belongs to, but it caught fire and plummeted to earth, where it exploded.
The plane hit the ground in the western side of Bengahzi, bursting into flames. A huge pall of smoke is currently rising over the city.
It would seem that Col Gaddafi’s announcement of a ceasefire has been completely ignored by his troops.But in line with the resolution, Mr Obama ruled out using US ground forces.On Friday, Col Gaddafi’s government declared a unilateral truce but there were reports that government offensives in rebel-held towns were continuing, and our correspondent says gunfire was also heard coming from the sea.
He says the tanks on the streets are part of a government attempt to outflank the city.
If Saturday’s fighting is confirmed as an attack by Col Gaddafi’s forces, it would be a very serious development and put more pressure on the international community to begin military action quickly, he adds.
But a Libyan government spokesman said there had been “no attacks whatsoever on Benghazi”.
“As we said, we are observing the ceasefire and we want international observers to come,” the spokesman, Mussa Ibrahim, told Reuters.
“There are rebels attacking villages and towns trying to instigate outside military intervention.”
Both sides have accused each other of breaking the ceasefire declared by Col Gaddafi’s government.
The Security Council vote called for an immediate ceasefire and endorsed the use of force – including a no-fly zone aimed at preventing pro-Gaddafi forces from bombing rebel-held towns.
The British and French, along with some Arab allies, are expected to play a leading role in any initial air strikes.
The French ambassador to the UN, Gerard Araud, told the BBC that he expected military intervention within hours of Saturday’s summit.
UK Prime Minister David Cameron – who is attending the meeting – has said British war planes are being moved to bases in the region.
“The clock is ticking and we must be ready to act quickly,” said Mr Cameron.
Saturday’s summit will be hosted by French President Nicolas Sarkozy. US Secretary of State Hillary Clinton will represent the Obama administration.
BBC diplomatic correspondent Bridget Kendall says it is a chance to demonstrate to the Gaddafi government, and to the rest of the world, the strength of outrage at his actions and the determination to stop him.
The US Navy is deploying additional warships to the Mediterranean to support possible military action.
The commander in charge of planning for the no-fly zone will be US Adm Samuel Locklear, the BBC’s Mark Urban has learnt.
Denmark and Canada have said they will supply fighter jets, with Italy, Spain and France making air bases available.
Saudi Arabia, Qatar, the UAE and Jordan could be among Arab states taking part.
Nato is already providing 24-hour surveillance over Libya with its Awacs planes.
Secretary-General Anders Fogh Rasmussen said Nato was “completing its planning to be ready to take appropriate action in support of the UN resolution as part of the broad international effort.”
The US ambassador to the UN, Susan Rice, told CNN that Col Gaddafi was already in violation of the UN Security Council resolution.
Col Gaddafi has ruled Libya for more than 40 years.
An uprising against him began last month after long-time leaders of neighbouring Tunisia and Egypt were toppled.
Al-Jazeera reported him on Friday as saying that the UN resolution was “blatant colonialism” that “does not have any justification”.