TRIPOLI, Libya, Sept. 1 (UPI) -- Embattled Libyan leader Moammar Gadhafi said in a television interview Thursday he will keep on fighting and proclaimed, "Let Libya burn."
Gadhafi, thought to be holed up in a desert stronghold after his forces were defeated in the Libyan capital of Tripoli, spoke to Syria-based al-Rai TV station, and the taped interview was broadcast on the 42nd anniversary of the coup that placed him in power.
Gadhafi insisted the people of Sirte and Bani Walid, two of the three major towns still loyal to him, are armed and ready to die for him, The Christian Science Monitor reported.
"We are not women. We will keep fighting," Gadhafi told al-Rai. "Let Libya burn."
The newspaper said Sirte, Gadhafi's hometown, is surrounded by insurgents who have cut off much of the city's utilities.
"We are not in a rush to get into Sirte," National Transitional Council spokesman Mohammad Zawawi told al-Jazeera. "It has no economic importance, and we are not going to lose casualties for it. We can cut supplies and wait, even more than a week."
The Monitor said reports coming out of Sirte show a desperate town as rebels squeeze it from east and west.
The rebels had threatened a military assault on Sirte, Gadhafi's birthplace and one of the last places under control of his loyalists, unless they surrendered by Saturday.
But officials said the rebels, who surround the city, will now give loyalists an additional week to negotiate a settlement, the BBC reported Thursday.
The extension was broadcast on local radio, the BBC said.
Word of the extension came as senior diplomats met in Paris for an international conference on Libya's future that included members of Libya's interim government, the National Transitional Council, and the hosts, French President Nicolas Sarkozy and British Prime Minister David Cameron.
The BBC said the NTC likely will ask Western diplomats for help with Libyan security and advice on the transition to democracy.
Meanwhile, an NTC official said rebel fighters have cornered Gadhafi, a statement one of Gadhafi's sons denied.
The NTC official said Gadhafi was boxed in at a desert stronghold about 150 miles from Tripoli and he was being urged to surrender, The New York Times reported Thursday.
However, Saif Gadhafi goaded rebels in an audio statement, vowing Gadhafi loyalists would never surrender and insisting "victory will be near."
"Our leadership is fine," he said in the statement aired by several Arab broadcasters. "We are drinking tea and coffee."
The younger Gadhafi gave little indication of his location except to say he was in a Tripoli suburb. It also wasn't clear if his remarks were pre-recorded, the Times said.
Abdel-Hafidh Ghoga, deputy NTC chairman, told the Times earlier Thursday fighters believed they had found the elder Gadhafi in Bani Walid, a desert town southeast of the Libyan capital.
Ghoga confirmed reports another son, Saadi Gadhafi, offered to negotiate a coalition government with the rebels, but rebels rejected the offer.
A third Gadhafi son, Khamis, was reported killed near Bani Walid, but his death has been not verified independently.
Gadhafi's wife, two other sons, a daughter and other relatives fled to Algeria, but the Algerian foreign minister Thursday squelched rumors the fugitive Libyan leader himself is in the country, CNN reported.
"Of course not," Foreign Minister Mourad Medelci told French radio when asked whether Gadhafi was in Algeria. "The hypothesis that Mr. Gadhafi could come knocking on our door was never considered."
Medelci said the Algerian government received members of Gadhafi's family for "mainly humanitarian reasons."
Kuwaiti news service KUNA, citing an Algerian newspaper, reported Gadhafi sought sanctuary in Algeria but Algerian President Abdelaziz Bouteflika refused to grant him an entry permit.
When Gadhafi arrived at a border region and tried to contact Bouteflika, the Algerian president did not respond and gave orders to border guards to bar Gadhafi from entering, the Algerian newspaper reported.
Officials said 31 members of the ousted leader's family were in Algeria.