TRIPOLI: Libya's defence minister held talks on Wednesday with townsmen at Bani Walid, a former stronghold of Muammar Gaddafi where local fighters drove out a pro-government militia this week.

"The minister came here today and we are speaking to him to find a solution to this problem," said Abdul Azziz al-Jmaili, a member of a local council in Bani Walid, 150 km (90 miles) south of Tripoli, adding that government forces were around the town.

The minister, Osama al-Juwali, is part of the provisional government installed in November by the National Transitional Council (NTC), the self-appointed body which won Western backing in an uprising that ousted Gaddafi in August.

Jmaili, speaking to Reuters by telephone, said a "peacekeeping force" comprised of units of former rebel fighters loyal to the NTC and drawn from other towns in the region had set up checkpoints in the outskirts of Bani Walid.

On Monday, armed residents attacked the barracks of the NTC force in the town, killing four fighters by the account of the government militia, and forced the unit to retreat to beyond the desert city's limits.

Echoing complaints by residents that the pro-NTC fighters had been harassing people, making arrests and abusing prisoners, the town's elders said on Tuesday that they were appointing their own local government and did not want any interference from the authorities in Tripoli. 

Bani Walid, stronghold of the Warfalla tribe which nominally counts about one Libyan in six among its members, was one of the last towns to surrender to the anti-Gaddafi rebellion last year.

This week's upheaval will heighten doubts about the NTC's ability to bring order and establish control over armed groups - goals crucial to rebuilding oil exports and securing Libya's vast desert borders in a region where al Qaeda is active.

People in Bani Walid reject accusations from NTC fighters that they remain loyal to Gaddafi, who was captured and killed in October after weeks on the run, or to his surviving sons, among them the now captive Saif al-Islam who staged his last stand in Bani Walid before fleeing into the Sahara in October.

Reuters reporters who toured Bani Walid on Tuesday saw no signs of the Gaddafi-era green flags which NTC supporters had earlier said had been hoisted over the town following the retreat of the pro-government militia.

Some pro-Gaddafi graffiti remains in the town, but the most common banners flying were the red, green and black tricolour of the NTC.

While Bani Walid was and remains a particular headache for the NTC, it is not alone. Towns and cities across the country are being run with little reference to central authority and in a number of areas old scores and local frictions are being fought over by groups which were nominally allies in the revolt.