The rebels have reportedly begun moving out of Benghazi towards the capital, with heavy fighting reported on the road to the west of the city just outside of Ajdabiya, according to the Australian Broadcasting Corporation.
Allied air strikes have apparently removed from the battlefield anything that could bring down one of the French, British or Italian jets patrolling the skies.
The strike on Gaddafi's heavily fortified compound was just 50 yards from the tent where Gaddafi usually greets foreign guests, and 450 yards from his home, which remains surrounded by voluntary human shields, according to the ABC.
But the Arab League has questioned the assault and criticized the alleged killing of civilians.
"What is happening in Libya differs from the aim of imposing a no-fly zone, and what we want is the protection of civilians and not the bombardment of more civilians," Arab League Secretary-General Amr Moussa said, according to Egypt's state news agency.
The Arab League had lent its crucial support to the UN Security Council resolution authorizing the use of military force to ensure a no-fly zone and enabling allies to "take all necessary measures" to prevent Muammar Gaddafi's forces from attacking civilians. Removal of Arab support could make it harder for Western forces to pursue the campaign.
Moussa called for a meeting of the group of 22 Arab nations to discuss the Libya crisis and ordered a report on the bombardment, Reuters reports.
Moussa said the Allied strikes, which began Saturday night, "led to the deaths and injuries of many Libyan civilians."
A Libyan health official told Reuters the strikes have killed 64 people, but he had no proof of that.
Adm. Mike Mullen, Chairman of the U.S. Joint Chiefs of Staff, said no civilians had been killed by the bombardment, Al Jazeera reported.
Allied forces intensified their assault on Libya Sunday, using air and sea attacks to not only enforce a no-fly zone but also halt Gaddafi's control on the ground.
Loud explosions rocked the capital, Tripoli, late Sunday, and a missile strike by Allied forces hit Gaddafi's compound and destroyed a building used as a command center, BBC reports.
The assault on Libyan forces, which has included Tomahawk cruise missiles and American and European aircraft precision bombs, has reinvigorated the rebels who as late as Saturday had been on the defensive as Gaddafi's forces used tanks, artillery and warplanes to push eastward.
Strikes also gave immediate relief to Benghazi, the rebel stronghold that faced fierce battles Saturday, the Associated Press reported.
"I feel like in two days max we will destroy Gaddafi," rebel Ezzeldin Helwani told the AP in Benghazi.
Mullen, America's top military commander told Fox News Sunday that outcome of military action Saturday and Sunday by French and British fighter jets and a U.S. warship was "very uncertain," the Telegraph reported.
He also made it clear that Washington did not see the goal of "Operation Odyssey Dawn" as removing Gaddafi but rather as narrowly focused on protecting civilians and aiding humanitarian efforts.
"We have halted [Gaddafi] in the vicinity of Benghazi, which is where he was most recently on the march," Mullen said, adding that a no-fly zone had effectively been achieved, with Western forces establishing combat air patrols over the city that would be extended westward toward Tripoli over time.
"The focus of the United Nations Security Council resolution was really [the rebel stronghold of] Benghazi, specifically, and to protect civilians. And we have done that, or we have started to do that. This is not about going after Gaddafi himself or attacking him at this particular point in time."
And Britain's foreign minister William Hague also ruled out an Iraq-style invasion, saying the allied mission was "nothing more and nothing less" that enforcing UN resolution 1973.