(TRIPOLI, Libya) -- Large numbers of rebel fighters are retreating into Libya's western towns and cities on Tuesday to regroup with weapons looted from Moammar Gadhafi's armory while others continue to clash with the Libyan leader's regime as the battle for Tripoli enters its third day.
Rebels broke into Bab al-Azizya, the main military compound in Tripoli, and reportedly filled several pick-up trucks to the brim with munitions and supplies. Rebel soldiers told ABC News that they plan to return to their bases then go back to Tripoli to attack Gadhafi's loyalists one more time in an attempt to seal victory.
The retreat is a shift in the situation in Tripoli on Monday when reports indicated that two of Gadhafi's three sons were captured by rebels and the 40-year reign of his regime was crumbling. However, Gadhafi's son and said-to-be successor Said al-Islam appeared on TV Monday, taking journalists on a tour of the areas of the capital still loyal to the regime.
Gadhafi's forces have been pushed into a corner since rebel fighters entered Tripoli on Sunday, with State Department officials estimating that the rebels are in control of 90 percent of Tripoli.
The conflict reportedly entered an extremely bloody phase on Tuesday with violent street fights erupting across Tripoli; hospitals in all the cities and towns around the capital overflowed with casualties, and reports of extensive deaths flooded in.
An emboldened Saif al Islam Gadhafi -- whom Libyan rebels claimed to have captured -- made his unexpected re-appearance to a cheering crowd at Tripoli's Rixos Hotel, where he claimed the Libyan regime will be victorious.
"We are going to win because the people are with us. That's why we're going to win," Saif al Islam Gadhafi said after turning up early Tuesday morning amongst regime forces at the hotel where dozens of foreign journalists are staying.
"Look at them, look at them," he said referring to Libyans who have flooded the capital. "In the streets, everywhere."
"We have broken the backbone of the rebels. It was a trap," he told the BBC. "We gave them a hard time, so we are winning."
When asked if his father is safe, Saif al Islam laughed and said, "Of course."
His appearance in a white limousine amid a convoy of armored SUVs on the streets of Tripoli conflicts with claims the rebels' National Transitional Council made on Sunday that three of Gadhafi's sons had either been captured or surrendered.
The leadership's spokesman Sadeq al-Kabir had no explanation for his sudden re-appearance and could only say, "This could be all lies."
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