Libyan Rebels in Retreat as Country's Foreign Minister Resigns

VIDEO: Footage shows rebels fleeing after ambush by Gadhafi forces.
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Libyan rebels have retreated despite support from NATO airstrikes, days after seeming to turn the tide against leader Moammar Gadhafi.

The ongoing battle has shown no signs of abating as President Obama Wednesday signed a presidential finding authorizing covert operations to assist the anti-Gadhafi forces.

Rebels were met overnight with heavy fire from Gadhafi forces as cars fled the eastern city of Ajdabiya, erasing almost all of the rebels' gains.

Gadhafi's troops have been using pickup trucks armed with heavy weapons, making them hard to distinguish from the rebels in the air.

After a fast advance to the doorstep of Gadhafi's hometown of Sirte, the rebels have lost town after town.

Haja Umm Ahmed's family fled Ajbadiya this morning because it was too dangerous to stay.

"We're terrified, we wanted to get out because of the kids," Ahmed said. "The bombs and the shelling were everywhere."

But with every major advance for Gadhafi, comes a major setback.

One of his closest allies made his own full retreat Wednesday night, all the way to London.

Libyan Foreign Minister Moussa Koussa resigned from the regime in protest against Gadhafi's attacks against civilians.

British Foreign Secretary William Hague said Koussa's departure is a sign that Gadhafi's regime is "crumbling."

Hague also said Koussa is "not being offered any immunity from British or international justice."

But as one member of Gadhafi's inner circle exits, another has newly emerged.

Once rarely seen in the media, Gadhafi's only daughter, Aisha, has now taken to Libyan TV and to the frontline, echoing her father's message that they will not back down.

Libya Intervention Concerns as NATO Takes Control Over Air Operations

Meanwhile, NATO officials said this morning that they have taken control over air operations in Libya, which include enforcing the no-fly zone.

"The transfer of authority on air assets is now complete," NATO spokeswoman Oana Lungescu told the Associated Press. "Everything that has been offered to us has been handed over."

As the presidential finding discusses a number of ways to help the opposition to Gadhafi, including authorizing some help now and setting up a legal framework for more activities in the future, it does not direct covert operatives to provide arms to the rebels immediately, although it does prepare for such a contingency.

President Obama said in a speech Monday that protecting civilians from near certain genocide and not ousting Gadhafi was the intended purpose of the U.S. air strikes that started two weeks ago.

Obama declined in an interview with ABC News anchor Diane Sawyer earlier this week to rule out arming the Libyan insurgents. When asked by Sawyer whether he would consider sending weapons to the rebels, Obama said, "We are examining all options to support the opposition."

White House spokesman Jay Carney said Wednesday that the president is "not ruling something in or ruling something out in terms of lethal assistance to the opposition. ... We're coordinating with the opposition and exploring ways that we can assist them with nonlethal assistance. And we'll look at other possibilities of assistance as we move forward."

Those wary of arming the Libyan opposition cite several reservations.

Rep. Mike Rogers, head of the House Intelligence Committee, warned the Obama administration against sending arms to the Libyan insurgents.

"It's safe to say what the rebels stand against," Rogers, R-Mich. said. "But we are a long way from an understanding of what they stand for. We don't have to look very far back in history to find examples of the unintended consequences of passing out advanced weapons to a group of fighters we didn't know as well as we should have."

ABC News' Jake Tapper, Jonathan Karl, Russell Goldman and The Associated Press contributed to this report.

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