Obama administration officials told stunned congressional committees Thursday that the US was pulling its warplanes out of the air assault on Libya in two days despite the evident failure of the ground offensive by the US-backed rebels against the regime of Libyan ruler Muammar Gaddafi.

On Friday, the Transitional National Council, the rebel leadership body in Benghazi, publicly offered a ceasefire while evidently pulling back from its previous condition that Gaddafi step down first. The latest offer, conveyed to UN mediator Abdelilah Al-Khatib, who is shuttling between Benghazi and Tripoli, was that the rebels would accept a ceasefire if Gaddafi’s forces stopped their attacks on rebel-held cities like Misrata and allowed opposition demonstrations.

In his testimony to several House and Senate panels, Defence Secretary Robert Gates declared categorically that the Obama administration had no plans to escalate the fighting in Libya, including by providing additional military aid to the rebels. Instead, he held out the prospect of an internal coup by Gaddafi’s own officers.

“His military, at a certain point, is going to have to face the question of whether they are prepared over time to be destroyed by these air attacks or whether they decide it’s time for him to go,” Gates told the Senate Armed Services Committee.

Troops loyal to Gaddafi have retaken several key oil ports in the last few days and on Friday attempted to storm into the city of Misrata, the country’s third largest. Press reports on the performance of the rebel troops have been scathing, with descriptions of rebel units disintegrating as soon as they were fired upon by artillery or rockets.

Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, said the reverses for the rebels over the last four days were due in part to heavy cloud cover in Libya, which has sharply reduced the number and effectiveness of air strikes on Gaddafi’s forces.

Mullen said the two weeks of bombing by US and NATO warplanes had destroyed as much as one-fourth of Gaddafi’s military hardware. If anything like that proportion of Gaddafi’s soldiers have been killed, the loss of life must be in the thousands.

But despite this significant death toll, Mullen said that the Gaddafi regime had at least a ten-to-one advantage over the rebels in terms of artillery, armour and other heavy weapons, as well as trained manpower. Some press reports have estimated the total rebel force involved in last week’s advance from Ajdabiya to the outskirts of Sirte as barely 1,000 men.

Since Monday, the film has unwound in reverse, with the rebels abandoning one town after another without putting up much resistance to the offensive by Gaddafi’s troops. On Friday, rebel forces made an attempt to strike back, mounting an attack on the oil port of Brega, from which they had fled the day before. The attack was quickly defeated, leaving the two sides in the Libyan civil war approximately where they were two weeks ago.

BBC television reported that a NATO air strike had killed seven civilians, most of them children, and wounded another 25 in Brega on Wednesday. The city has changed hands six times in six weeks.

The declaration by Gates and Mullen that US fighter jets were being pulled out, leaving the attack on Libya to NATO warplanes from Britain, France and other European countries, as well as Canada, was greeted with undisguised hostility from congressional Democrats and Republicans, most of whom clamored for more aggressive military action.

NATO formally took command of the entire air war on Thursday, amid reports that the air strikes were lessening in intensity. NATO officials said that sandstorms had affected operations Thursday, when 178 missions were flown but only 74 resulted in air strikes on ground targets.

Among the countries moving in to replace the US component of the air war is Sweden, whose parliament approved plans to send eight fighter jets and a transport plane to join the NATO operation this weekend. The Swedish jets will be barred, however, from attacking Gaddafi’s ground forces unless they are fired on first.

Admiral Mullen said that AC-130 gun ships and A-10 Thunderbolts, both used this week for close air support of the rebel forces, would stop flying Saturday but would be on standby if the situation on the ground became “dire enough,” at which point NATO could request their assistance.

This provoked a retort from Republican Senator Lindsey Graham of South Carolina: “The idea that the AC-130s and the A-10s and American air power are grounded unless the place goes to hell is just so unnerving that I can’t express it adequately.”

Senator John McCain of Arizona, the Republican presidential nominee in 2008, made a sarcastic reference to the ongoing rout of the rebel forces, telling the Pentagon officials, “Your timing is exquisite.” He told Mullen that a halt in US air strikes was “a profound mistake with potentially disastrous consequences.”

Democratic Senator Jeanne Shaheen of New Hampshire asked worriedly whether NATO could sustain the air strikes without US planes. She could only extract a tepid statement from Gates: “They certainly have made that commitment, and we will see.”

At a House Armed Services Committee hearing, Republican Congressman Randy Forbes of Virginia pressed Gates on the refusal of the Obama administration to call the Libyan military action a “war.” He asked Gates whether it would be an act of war if another country fired a cruise missile at New York City—as the United States has against Tripoli—and Gates responded provocatively, “probably so.”

Gates and Mullen have been reportedly the least enthusiastic officials in the Obama administration since the war in Libya began, and their testimony came close to a public split. Both men categorically rejected significant US military aid to the rebels, although Obama himself declared that he has not yet made a final decision.

The two Pentagon officials also denied that the military operations to bolster the rebel forces were tantamount to supporting regime-change in Libya, a position that was criticized by politicians of both parties. Democratic Senator James Webb of Virginia, a Marine Corps officer during the Vietnam War, said “It seems to me, and I think everybody else, that we are clearly involved in regime-change.”

Republican Congressman Mike Coffman of Colorado said it was absurd for the Obama administration to call the war a humanitarian intervention “This is the most muddled definition of an operation probably in US military history,” he said. “To say this is not about regime-change is crazy. Of course, it is about regime-change.”

The crisis and confusion in Washington are matched by the divisions between the US-NATO forces and the camp of the rebels in Benghazi. For the first time Thursday, NATO officials issued a warning to the rebels not to attack civilians in the course of their fight against Gaddafi.

“We’ve been conveying a message to the rebels that we will be compelled to defend civilians, whether pro-Qaddafi or pro-opposition,” an Obama administration official told the New York Times. “We are working very hard behind the scenes with the rebels so we don’t confront a situation where we face a decision to strike the rebels to defend civilians.”

The warning followed reports that rebel fighters were attacking and killing immigrant workers from sub-Saharan Africa on the pretext that some of them were mercenaries for Gaddafi.

More troubling from the perspective of the NATO powers were reports of a resurgence of popular support for the Gaddafi regime in the face of the US-European war of aggression. Civilian irregulars engaged in armed attacks on the rebel forces in Sirte, Bin Jawwad and other towns that fell to the rebel advance last week. The Libyan army has begun supplying assault rifles and other weapons to civilians in selected towns where there is support for Gaddafi.

This poses a political problem for the US and NATO, since the UN Security Council resolution authorized military action on the pretext of saving civilians from massacre, and the war has been marketed to US and European public opinion as a humanitarian exercise. If the rebels are now perceived as the ones killing civilians, it could provoke open political opposition in many countries.

Reflecting the public relations concerns of the Obama administration, the New York Times wrote of the problem of “how NATO would respond to rebels firing on a town of Qaddafi sympathizers, like Surt.”

There are mounting divisions within the rebel headquarters as well. The Los Angeles Times reported that Gen. Abdul Fatah Younis, former interior minister for Gaddafi, “is viewed with suspicion by some rebels and political leaders in Benghazi.”

“Younis has been challenged by another former Kadafi confidant, Khalifa Hefter, a former army officer who broke with Kadafi years ago and moved to the US,” the newspaper continued. “Hefter has clashed with Younis since returning recently to Libya and replacing him as titular commander of the rebel movement.”

It is the first time that one of the leading US daily newspapers has published the name of Hefter, a longtime CIA collaborator, who became the top rebel commander two weeks ago. The US media has sought to keep this fact quiet in order to avoid discrediting the rebel military as a CIA front group like the “contras” in Nicaragua or the right-wing UNITA group in Angola. Al Qaeda originated as a similar CIA-organized formation in Afghanistan, fighting the Soviet army in the 1980s.

Meanwhile, the newspaper Asia Times reported Thursday that the Obama administration obtained the support of the Arab League for the imposition of a no-fly zone in Libya in exchange for giving its backing to the invasion of the Persian Gulf sheikdom of Bahrain by military forces of Saudi Arabia and the United Arab Emirates.

The newspaper cited two unnamed diplomats, a European and a member of the Brazil-Russia-India-China group, as its sources for the claim. The Arab League held a hurried meeting March 12—with only 11 of its 22 members represented—and voted to back a no-fly zone in Libya. Of the 11 members, six were from the Saudi-dominated Gulf Cooperation Council, and all voted for the no-fly zone. Two days later, on March 14, Saudi Arabia and the UAE sent troops into Bahrain, with the blessing of the Obama administration.