As many as 14 anti-Gaddafi fighters may have died in a coalition air strike on the outskirts of Brega, in eastern Libya. Meanwhile, fighting rages in the rebel stronghold of Misrata.
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The incident occurred at around 2000 GMT on Friday.
There were claims that pro-Gaddafi forces had infiltrated the rebel fighters in an increasingly chaotic battle for the oil town, and then fired anti-aircraft guns in the air, prompting Nato forces to bomb them.
But rebels say they want the air strikes to continue. Speaking in Benghazi, rebel spokesman Mustafa Gheriani said: "You have to look at the big picture. Mistakes will happen.
"We are trying to get rid of Gaddafi and there will be casualties – although, of course, it does not make us happy."
We are trying to get rid of Gaddafi and there will be casualties - although, of course, it does not make us happy. Mustafa Gheriani, rebel spokesman
Nato spokeswoman Oana Lungescu announced: "Nato is always concerned by reports of civilian casualties. Nato's mission is to protect civilians and civilian areas from attack."
Fighting around Brega's university, to the west of the town, was continuing early this morning, rebels said. Around the eastern gate, volunteer fighters were seen streaming away in cars after coming under heavy fire from Gaddafi forces.
On 22 March it was reported that six villagers had been shot and injured in a field on the outskirts of Benghazi when a US helicopter landed to rescue a crew member from a crashed jet.
Who's fighting who?
Libya's rebel movement is an ad hoc coalition of former Gaddafi men, soldiers, democrats and radicals with connections to al-Qaeda.
For more, read Who Knows Who: Libya's rebel movement - radicals or democrats?
Meanwhile, medical officials have reported that six civilians were killed by Libyan government forces in Misrata, some 200km east of the capital, Tripoli, during a campaign of shelling and sniper fire aimed at driving out rebels.
It is estimated that 243 people have been killed and some 1,000 wounded in more than a month and a half of fighting for the city, a rebel stronghold. Earlier this week journalist Mike Hobbs, writing for Channel 4 News, warned that Misrata faces a humanitarian crisis unless the coalition makes determined efforts to relieve inhabitants from an onslaught by pro-regime fighters.
On Friday a rebel leader offered a truce to the Gaddafi regime on condition that Colonel Gaddafi left Libya and his forces quit cities under government control, but Libya's government dismissed the proposal.