An AFP correspondent in rebel-held territory east of the town heard some 10 massive blasts in the space of minutes as the two sides disputed the strategic road junction on the east's coastal and desert highways.
"There is intense shelling of the town from the west," resident Hafeth Zwai told AFP by telephone.
He said he had no idea what casualties or damage the artillery bombardment by forces loyal to Moamer Qadhafi was causing as he was afraid to leave his home.
On Saturday, after advancing towards the oil refinery town of Brega, some 80 kilometres (50 miles) further west on the central coast, rebel forces ran into a loyalist counter-offensive that saw them pushed all the back to the eastern edge of Ajdabiya.
The town itself was turned into a battlefield between the rival fighters.