Libya's fugitive toppled strongman Muammar Gaddafi has escaped to Niger, a Niger military source has said.

Al Jazeera has reported that a large convoy of 200 Libyan army vehicles has entered Niger, arriving from the neighboring Libya, presumably transporting Gaddafi and forces loyal to him. Rumors have said there has been a deal struck to allow him to seek refuge in a friendly African state, Sky News points out.

However, Colonel Gaddafi's spokesman, Moussa Ibrahim, has insisted that the dictator has remained in Libya. Ibrahim has further declared that Gaddafi and his sons are ready to fight to the death. Gaddafi is "in excellent health" and was "still powerful", according to the spokesman.

Meanwhile, Gadhafi loyalists have been holed up in several towns, including Bani Walid, some 140 kilometres southeast of Tripoli. The town has been surrounded by thousands of rebel fighters.