Forces loyal to Libya’s interim government fled from Bani Walid on Friday after meeting fierce resistance from Gaddafi loyalists.
The former rebels pulled back after hours of intense fighting failed to drive out pro-Gaddafi troops.
Their attack came after giving civilians a 48-hour deadline to get out.
Revolutionary forces also tried to take another Gaddafi stronghold: Sirte, the toppled Libyan leader’s birthplace on the Mediterranean coast.
Reports described his supporters taking to the rooftops as the National Transitional Council’s forces pushed into the city from the south and west.
At least eleven were killed and 34 injured in Sirte alone.
Both Sirte and Bani Walid are among the last pockets of resistance to the NTC’s rule, four weeks after the coalition took the capital Tripoli.