"We do not in any way rule out the use of military assets. We must not tolerate this regime using military force against its own people," Cameron said.
Italian Foreign Minister Franco Frattini, however, said that the institution of a no-fly zone over Libya should be a "political decision of the UN Security Council, and attention should be paid to the implications and consequences."
The developments come as the opposition appears to be gaining ground in its fight to end Gadhafi's 41-year-rule. The European Union said that Gadhafi has lost control of most of the country's oil and gas fields. Over the weekend, the opposition's control moved closer to Tripoli, Gadhafi's stronghold.
In Zawiyah, just 30 miles west of Tripoli, civilian opponents and some military defectors claim they've been in control for several days.
"They can kill all of us, but what the hell? We're looking for freedom; we have a cause," one protester said.
Protesters in the suburbs of Tripoli chanted, '"The blood of martyrs won't go to waste," the BBC reported.
Gadhafi has attempted to appease those living in the capital by offering $400 per family. There were reports of long lines at banks in Tripoli with people seeking the money. Food prices continue to skyrocket with rice prices at $40 for a 10-pound bag.
The standoff between protesters and the regime have sent migrant workers fleeing the country. In an airport in Tripoli, huge crowds of migrant workers are struggling to get out, camping on the airport grounds.
In Misrata, 125 miles east of Tripoli, skirmishes took place overnight between rebel forces controlling the city and troops loyal to the regime, according to residents.
Each side controls part of a sprawling air base on the outskirts of the city.
Saif Gadhafi, one of his father's chief advisers, said that the government has not used force against protesters.
"We didn't use force. Second, we still have people around us," Saif Gadhafi said.
Saif Gadhafi denied reports of helicopter gunships firing on people and reports of Libyan Air Force pilots defecting, jettisoning their planes rather than carry out orders to bomb citizens.
"Show me a single attack. Show me a single bomb. Show me a single casualty. The Libyan Air Force destroyed just the ammunition sites," Saif Gadhafi said.
A newly released amateur video purportedly shows Saif Gadhafi holding a gun talking to supporters.
Gadhafi's regime invited more than 100 journalists to the turbulent country in an effort to prove they've shown restraint against their opponents.
When asked about President Obama's call for Col. Gadhafi to step down, Saif Gadhafi responded, "First of all, it's not American business. Do you think this is a solution? Of course not."
Saadi Gadhafi, a professional soccer player who is less involved with politics than his brother, called the protests sweeping the country and demanding an end to his father's rule, an "earthquake."
"If he [Col. Gadhafi] were to leave today, there would be war," he said. "Civil war in Libya."
ABC News' Christiane Amanpour, Katie Hinman, Huma Khan, Ann Wise, Jean-Nicholas Fievet and The Associated Press contributed to this report.