Diehard supporters of former Libyan leader Muammar Qaddafi are fighting for control of the regime's former stronghold of Bani Walid.
News agencies are quoting an unidentified local as saying four people have been killed and as many as 20 wounded in the clashes.
The source also said heavy weaponry was being used.
The violence was sparked when militia fighters loyal to the country's National Transitional Council arrested some suspected Qaddafi loyalists in the area.
Bani Walid is about 200 kilometers southeast of the capital, Tripoli, and is the base of the powerful Warfallah tribe.
Compiled from agency reports