(Updates with new details on fighting)
* About 100 NTC military vehicles storm into city of Sirte
* Pro-Gaddafi snipers force attackers to seek cover
* Fleeing residents say civilians being killed in crossfire
By Rania El Gamal and Tim Gaynor
SIRTE, Libya, Oct 8 (Reuters) - Transitional Libyan government forces swept into Sirte on Saturday in one of the biggest assaults yet on Muammar Gaddafi’s hometown, but had to seek cover when they drew fire from his die-hard loyalists.
Fighters with the National Transitional Council (NTC) shouted “Allahu Akbar!” or “God is greatest!” as their force of about 100 pick-up trucks mounted with heavy weapons pushed into a residential district on the southern side of Sirte.
They were forced to scramble for refuge under heavy fire from pro-Gaddafi fighters holed up in an apartment complex, a Reuters reporter on the scene reported. Two NTC fighters were killed and three wounded in the exchanges.
“There is a very vicious battle now in Sirte,” NTC chairman Mustafa Abdel Jalil told reporters in the capital Tripoli, where he was meeting defence ministers from Britain and Italy.
“Today our fighters are dealing with the snipers that are taking positions and hiding in the city of Sirte.”
Taking Sirte would bring Libya’s new rulers closer to their goal of establishing control of the entire country almost two months after they seized the capital Tripoli, but they are also under pressure to spare the civilians trapped inside.
The NTC forces have thrust Gaddafi loyalists back from defensive positions well outside Sirte, and are now contesting control of the centre of the Mediterranean coastal city in often-chaotic, street-by-street battles.
A prolonged struggle to capture the few remaining bastions of pro-Gaddafi loyalists has sidetracked NTC efforts to set up effective government over the sprawling North African country and rebuild oil production vital to its economy.
Thousands of civilians have fled Sirte as fighting has intensified, describing increasingly desperate conditions for those still inside the seafront city.
There is no electricity while drinking water and food are running out, and people have spoken of the stench of rotting corpses at the city’s hospital.
More residents were leaving Sirte on Saturday. “We could not understand who was firing,” said Milad Abdul Rahim, who was heading out of Sirte. “It is just random.”
Hassan Massoud drove out of the city in a pick-up truck with his family in the cab and luggage teetering on the back. He said he had decided to leave after his neighbour’s house was hit.
“It was single-storey. It collapsed on them. It killed a man and a girl,” he said.
Along with the interior desert town of Bani Walid, Sirte is one of the last redoubts of Gaddafi loyalists in the country he ruled alone for 42 years.
It holds symbolic importance because Gaddafi turned it from a fishing village into a second capital. He built opulent villas, hotels and conference halls to house the international summits he liked to stage there.
NTC officials say they believed Gaddafi’s son Mo’tassim, who used to be the national security adviser, was hiding somewhere in Sirte. “(The loyalists) are defending fiercely,” said Abdullah Aaly, an NTC field commander. “It looks like they are protecting someone important.”
But taking Sirte carries risks for Libya’s new rulers. A drawn-out battle with many civilian casualties will breed hostility that will make it very difficult for the NTC to unite the country once the fighting is over.
After their push into the south of Sirte, some of the NTC pick-ups took up position on a raised piece of ground about 1.5 km (1 mile) from the marble-clad Ouagadougou conference hall, where Gaddafi once hosted Arab and African heads of state.
From the hill, they fired salvoes of rockets at buildings down below, sending smoke curling into the sky. Gaddafi loyalists responded with mortars and bullets which whistled past the parked pick-up trucks.
For the anti-Gaddafi fighters down in Sirte’s neat grid of streets, their offensive has turned into a deadly game of cat-and-mouse with snipers.
They said pro-Gaddafi forces had stationed snipers in the Ouagadougou hall, the university and hospital.
More snipers were in residential buildings in the northeastern corner of Sirte. Faraj Leshersh, an NTC fighter in that sector, said the snipers were expert at operating unseen.
He said they used trenches between buildings which allowed them to move location without showing themselves. At other times, he said, they burned tyres so the smoke would conceal their movements.
A sandstorm on Saturday gave them cover to regain a little of the ground in the northeast of the city that they had earlier lost to the NTC forces.
“They (pro-Gaddafi forces) took advantage of the dust and they advanced a little. There is 500 metres (yards) between us and them,” Leshersh said from a luxury hotel now being used as a base to attack the city.
Another anti-Gaddafi fighter said that instead of sending in men on foot to locate the snipers, the NTC forces were now identifying their firing positions from a distance and blasting the buildings where they were hiding with heavy weapons.
“What made us tired is the snipers,” said the fighter, Abdelsalam al-Rishy. “We’re now using RPGs (rocket-propelled grenades) to deal with the snipers.”
At a field dressing station just west of Sirte, doctors were treating wounded NTC fighters.
One of the casualties, Mohammed Gallous, was bleeding from a head wound sustained when a mortar landed near him. He was asking people nearby if his ear was still attached to his head.
When doctors tried to insert a needle in his arm so they could set up a drip, he shouted: “No needles. Hit me with an RPG, I don’t care. But no needles.”
Officials with the new government who have been given the task of tracking down Muammar Gaddafi say he is probably being sheltered by nomadic Tuareg tribesman far to the south, in the Sahara desert. (Additional reporting by Barry Malone and Joseph Logan in Tripoli; Writing by Christian Lowe; Editing by Mark Heinrich)