"We are in our own home, and we will fight to the last drop of blood to defend our honour, our oil and our riches," he said.
"This war was imposed on us, and our only choice is to fight -- men, women and children -- with all our weapons to liberate (the rebel strongholds) of Benghazi, Misrata and Al-Jabal Al-Gharbi (the Nafusa mountains southwest of the capital).
"We will march on the cities controlled by the traitors and mercenaries of NATO to retake them. NATO's bombs do not scare us."
In his last address, on Saturday, Kadhafi said he would never leave the land of his ancestors after new international calls for him to go and as rebels pressed their campaign to overthrow him.
Hours before Kadhafi spoke, rebels, who claimed to have retaken Brega in the east, said they were trying to push the enemy far enough west to get the key refinery town out of shelling range.
Kadhafi's spokesman denied that the town had fallen.
Rebel military sources said some Kadhafi forces were still thought to be at Bishr to the west, and were arcing rockets over Brega down onto rebel positions.
They added that the bulk of their forces were still waiting to enter the city, hampered by vast quantities of mines and trenches filled with flammable liquids.
Abdulrazag Elaradi, a National Transitional Council (NTC) member visiting the front, said that in one 7.5 kilometre (five mile) tract the rebels had found more than 700 mines.
"This has never been done before; people have to know about this," he said, appalled that Kadhafi would mine his own country.
The rebels said on Monday loyalist forces had retreated from Brega, leaving just 150-200 fighters pinned down inside.
Citing intercepted radio chatter, another rebel military source said loyalists were led in retreat by their commander, Kadhafi's son Mutassim, leaving just a few fighters with dwindling supplies.
"Their food and water supplies are cut," said Abdulmolah. "It's a matter of time before they come to their senses; we hope to prevent some bloodshed."
Kadhafi spokesman Mussa Ibrahim denied that Brega had fallen to the rebels.
"They tried to recapture the town, but were repulsed losing 500 of their fighters in the battle," Ibrahim said in Tripoli.
Medics said at least seven rebel fighters were killed and 45 wounded during the day.
Brega is a major centre for channelling oil through the pipelines of the resource-rich Sirte Basin to the rest of the world.
In the west, rebels consolidated their grip on the desert hamlet of Gualish south of Tripoli as commanders said a new push on the capital could be launched by the end of the month.
"We are preparing for the battle. We hope (it will take place), God willing, before Ramadan," or just after the start of the holy Muslim fasting month at the beginning of August, said rebel commander Mokhtar Lakhdar.
Speaking in Gualish Lakhdar said they were waiting for the green light from rebel headquarters in Benghazi.
The next rebel target is Asabah, 80 kilometres (50 miles) south of the capital, and the last barrier between rebels and the garrison town of Gharyan.
Meanwhile, amid mounting diplomatic pressure on Kadhafi to step down after four decades in power, US envoys held a rare meeting with regime representatives over the weekend.
Saturday's meeting came a day after the United States and other Western and regional powers recognised the NTC as Libya's legitimate authority.
US officials "met with regime representatives to deliver a clear and firm message that the only way to move forward is for Kadhafi to step down," a US official said in Washington.
"This was not a negotiation. It was the delivery of a message," the official said. "We have no plans to meet again, because the message has been delivered."
However, Ibrahim told CNN television the talks were the start of a diplomatic process and the "first step in dialogue."
Meanwhile, Russian news agencies said that Foreign Minister Sergei Lavrov and his Libyan counterpart Abdelati al-Obeidi will discuss the current situation in Libya and African Union-led mediation efforts on Wednesday afternoon in Moscow.
And rebel military leaders from Misrata will meet French President Nicolas Sarkozy on Wednesday seeking extra aid, a source close to them told AFP.
Sarkozy's office declined to comment.
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