It is the first time that fighting has broken out in the Libyan capital since rebels took hold of the city in August.

Forces of the new government, the National Transitional Council (NTC), exchanged heavy gunfire with pro-Gaddafi fighters in the first sign of resistance to the NTC for months.

Hospital sources say that at least eight people were wounded in the gunbattle.

"A group of Muammar's troops went through the Abu Salim area and started attacking from above the buildings where protesters were holding green flags and pictures of Muammar," an NTC fighter said.

NTC fighters in pick-up trucks raced towards the scene in the Abu Salim neighbourhood, a centre of support for Muammar Gaddafi. The two sides exchanged automatic and heavy machine-gun fire.

In footage from Tripoli NTC fighters can be seen threatening an arrested Gaddafi loyalist with guns and knives and kicking and slapping him as he is dragged away.

But the deputy head of the supreme military council in Tripoli, Khaled Sharif, insisted the fighting was "very limited" in scope.

"Everything is under control now. We have arrested some of them and we are pursuing the rest," he said.