State television said 48 people died in the U.S. and European strikes, which marked the widest international military effort since the Iraq war and came as the rebels saw a month's worth of gains reversed by Gadhafi's overwhelming firepower.
Rebels said the international strikes also hit an air force complex outside Misrata, the last rebel-held city in Libya's west. Gadhafi forces have bombarded the city from the complex, which houses a base and a military academy.
In Benghazi, the rebel capital and first city to fall to the uprising that began Feb. 15, people said the strikes happened just in time. Libyan government tanks and troops had reached the edges of the city on Saturday.
Mohammed Faraj, 44, a former military man who joined the rebels, held a grenade in each hand as he manned a checkpoint on the outskirts of the city.
"Me and all of Benghazi, we will die before Gadhafi sets foot here again," Faraj said. "Our spirits are very high."
Though the U.S. and Europeans focused their attention on the no-fly zone, the U.N. resolution authorizing the action demanded a ceasefire and authorizes "all necessary means" to protect civilians.
Adm. Mike Mullen, the top U.S. military officer, said the goals of the international campaign "are limited and it isn't about seeing him go."
In the phone call to state television, Gadhafi said he would not let up on Benghazi and said the government had opened up weapons depots to all Libyans, who were now armed with "automatic weapons, mortars and bombs." State television said Gadhafi's supporters were converging on airports as human shields.
"We promise you a long war," he said.
The U.S. military said 112 Tomahawk cruise missiles were fired from American and British ships and submarines at more than 20 coastal targets to clear the way for air patrols to ground Libya's air force. French fighter jets fired the first salvos, carrying out several strikes in the rebel-held east, while British fighter jets also bombarded the North African nation.
President Barack Obama said military action was not his first choice and reiterated that he would not send American ground troops.
"This is not an outcome the U.S. or any of our partners sought," Obama said from Brazil, where he is starting a five-day visit to Latin America. "We cannot stand idly by when a tyrant tells his people there will be no mercy."
Explosions rocked the coastal cities, including Tripoli, where anti-aircraft guns could be heard firing overnight.
Libyan TV quoted the armed forces command as saying 48 people were killed and 150 wounded in the allied assault. It said most of the casualties were children but gave no more details.
Mullen told NBC's "Meet the Press" that he had seen no reports of civilian casualties as a result of the coalition's military operation.
The International Committee of the Red Cross said it was "deeply concerned" about civilians and called on all sides work to distinguish between civilians and fighters and allow safe access for humanitarian organizations.
Gadhafi, who has ruled Libya for 41 years, said the international action against his forces was unjustified, calling it "simply a colonial crusader aggression that may ignite another large-scale crusader war."
His regime acted quickly in the run-up to the strikes, sending warplanes, tanks and troops into the eastern city of Benghazi, the rebel capital and first city to fall to the rebellion that began Feb. 15. Then the government attacks appeared to go silent.
Operation Odyssey Dawn, as the allied assault has been dubbed, followed an emergency summit in Paris during which the 22 leaders and top officials agreed to do everything necessary to make Gadhafi respect a U.N. Security Council resolution Thursday calling for the no-fly zone and demanding a cease-fire, French President Nicolas Sarkozy said.
Navy Vice Adm. William E. Gortney, director of the Pentagon's Joint Staff, told reporters in Washington that U.S. ships and a British submarine had launched the first phase of a missile assault on Libyan air defenses.
Gortney said the mission has two goals: prevent further attacks by Libyan forces on rebels and civilians, and degrade the Libyan military's ability to contest a no-fly zone.
Defense officials cautioned it was too early to fully gauge the impact of the onslaught. But a senior defense official, who spoke on condition of anonymity because the mission was ongoing, said the Americans felt that Libya's air defenses had been heavily damaged given the precision targeting of the cruise missiles.
Mohammed Ali, a spokesman for the exiled opposition group the Libyan Salvation Front, said the Libyan air force headquarters at the Mateiga air base in eastern Tripoli and the Aviation Academy in Misrata had been targeted.
Switzerland-based Libyan activist Fathi al-Warfali said Misrata came under heavy shelling Sunday.
"Misrata is the only city in western Libya not under Gadhafi's control; he is trying hard to change its position," al-Warfala said.
About 20 French fighter jets carried out "several strikes" earlier Saturday, military spokesman Thierry Burkhard told The Associated Press.
"All our planes have returned to base tonight," he said, and denied a Libyan TV report that a French plane had been hit.
He would not elaborate on what was hit or where, but said French forces are focusing on the Benghazi area and U.S. forces are focused in the west.
The U.S. has struck Libya before. Former President Reagan launched U.S. airstrikes on Libya in 1986 after a bombing at a Berlin disco - which the U.S. blamed on Libya - that killed three people, including two American soldiers. The airstrikes killed about 100 people in Libya, including Gadhafi's young adopted daughter at his Tripoli compound.