One of Moammar Gadhafi's sons whom the rebels claimed to have captured appeared tonight with the Libyan strongman's troops, telling reporters that his father was safe in Tripoli and that the balance of power has shifted.
"We have broken the backbone of the rebels. It was a trap," Seif al Islam Gadhafi told the BBC. "We gave them a hard time, so we are winning."
Seif al Islam was seen laughing, carried on the shoulders of government soldiers and riding on a tank near the Rixos Hotel, where many foreign journalists are staying.
When asked by reporters whether Gadhafi was safe, Seif al Islam laughed and said, "Of course."
Earlier today, the rebels' National Transitional Council claimed that three of Gadhafi's sons had either been captured or surrendered.
But this afternoon the NTC's ambassador to the United States, Ali Suleiman Aujali, told ABC News that Muhammad Gadhafi had escaped after surrendering to opposition forces.
Muhammad had publicly announced that he was surrendering during a weepy phone call to Al Jazeera in which he said his house was surrounded by gunfire.
The NTC had said Sunday that Muhammad's brothers, Seif al-Islam and Saadi, were captured by rebel forces in Tripoli.
Al Jazeera Arabic reported today that rebel forces have entered the house of Ayesha Gadhafi, the Libyan leader's daughter.
Earlier today, President Obama called on Gadhafi to resign and praised the rebels fighting to oust the strongman and gain control of Tripoli.
"Although it's clear that Gadhafi's rule is over, he still has the opportunity to reduce further bloodshed by explicitly relinquishing power to the people of Libya and calling for those forces that continue to fight to lay down their arms for the sake of Libya," Obama said from Martha's Vineyard, Mass., where he's vacationing.
Obama called the situation in Tripoli "very fluid."
"I want to emphasize that this is not over yet. As the regime collapses, there is still fierce fighting in some areas. We have reports of regime elements threatening to continue fighting," he said.
Rebels attempting to take over Gadhafi's presidential compound, Bab al-Aziziya, have been met by tanks. Pentagon officials said pro-Gadhafi forces also launched a Scud-B missile at an unknown target earlier this afternoon.
Firefights are also raging in Green Square, the symbolic heart of Gadhafi's regime, which rebels Sunday renamed Martyrs' Square, and outside the Rixos Hotel, which houses several journalists.
State Department officials estimate that the rebels are in control of 90 percent of Tripoli.
"Over the last several days, the situation in Libya has reached a tipping point as the opposition increased its coordination from east to west, took town after town and the people of Tripoli rose up to claim their freedom. For over four decades, the Libyan people have lived under the rule of a tyrant who denied them their most basic human rights," Obama said.
Obama pledged that the United States would act as a "friend and partner" to the Transitional National Council, the administration set up by the rebel forces, as they form a new government.
Pentagon: Gadhafi Still in Libya
Obama echoed the pleas of top diplomats urging Libyans not to seek violent retribution.
"True justice will not come from reprisals, violence," he said. "It will come from reconciliation and a Libya that allows its citizens to determine their own destiny."
As Obama spoke, the whereabouts of Gadhafi are still unknown. Pentagon officials believe Gadhafi is still in Libya.
"I think that's probably fair to say that we believe he's still in the country," Pentagon spokesman Col. Dave Lapan said. "On what basis can we say that? Just again, it's a belief. We do not have any information that he has left the country."
Lapan said there's been no indication that there's been any outreach to the United States from the Ghadafi government.
Lapan said he does not anticipate U.S. troops being on the ground in Libya. So far, the United States and other NATO allies have helped the rebels through coordinated air strikes.
"Whether there is a mission after that the U.N. or NATO or others undertake ... it will not include U.S. boots on the ground," Lapan said.
Gadhafi last spoke publicly Sunday in an audio message urging Libyans to protect Tripoli from rebels. Since then, at least two of his sons have been captured. Gadhafi's heir, Seif al-Islam, and former soccer player, Saadi, have been captured.
This morning, U.N. Secretary General Ban Ki Moon called for a "smooth transition" in Libya and asked that there be no more loss of life. The U.N. chief did not ask explicitly for Gadhafi to step down, but Victoria Nuland, a spokeswoman for the State Department, did in a news conference this afternoon.
"If he is alive, the best thing he can do for his people is step down immediately and end this," Nuland said.
Secretary of State Hillary Clinton spent the morning working the phones, talking to the leader of the NTC and with foreign ministers in several countries, Nuland said.
"Secretary Clinton conveyed the U.S.'s strong support of the Libyans to bring an end to the Gadhafi regime and to begin a new chapter in Libya's history," she said.
Assistant Secretary of State for Near Eastern Affairs Jeffrey Feltman said this morning on "Good Morning America" that Gadhafi's 42-year regime was now part of Libya's past.
"I think what's clear is that the rebels are winning, that it's only a matter of time before Gadhafi has to step down, before Gadhafi loses the entire country," he said.
ABC News' Luis Martinez, Jeffrey Kofman and George Stephanopoulos contributed to this report.