The speech by the Libyan leader - who shouted and pounded his fists on the podium - was an all-out call for his backers to impose control over the capital and take back other cities. After a week of upheaval, protesters backed by defecting army units have claimed control over almost the entire eastern half of Libya's 1,000-mile (1,600-kilometer) Mediterranean coast, including several oil-producing areas.
"You men and women who love Gadhafi ... get out of your homes and fill the streets," he said. "Leave your homes and attack them in their lairs."
Celebratory gunfire by Gadhafi supporters rang out in the capital of Tripoli after the leader's speech, while in protester-held Benghazi, Libya's second-largest city, people threw shoes at a screen showing his address, venting their contempt.
State TV showed a crowd of Gadhafi supporters in Tripoli's Green Square, raising his portrait and waving flags as they swayed to music after the address. Residents contacted by The Associated Press said no anti-government protesters ventured out of their homes after dark, and gun-toting guards manned checkpoints with occasional bursts of gunfire heard throughout the city.
International alarm rose over the crisis, which sent oil prices soaring to the highest level in more than two years on Tuesday and sparked a scramble by European and other countries to get their citizens out of the North African nation. The U.N. Security Council held an emergency meeting that ended with a statement condemning the crackdown, expressing "grave concern" and calling for an "immediate end to the violence" and steps to address the legitimate demands of the Libyan people.
Germany Chancellor Angela Merkel called Gadhafi's speech "very, very appalling," saying it "amounted to him declaring war on his own people." Libya's own deputy ambassador at the U.N., who now calls for Gadhafi's ouster, has urged the world body to enforce a no-fly zone over the country to protect protesters.
"This violence is completely unacceptable," added Secretary of State Hillary Rodham Clinton.
Gadhafi's retaliation has already been the harshest in the Arab world to the wave of anti-government protests sweeping the Middle East. Nearly 300 people have been killed, according to a partial count by the New York-based Human Rights Watch.
In two nights of bloodshed, Tripoli residents described a rampage by pro-Gadhafi militiamen - a mix of Libyans and foreign mercenaries - who shot on sight anyone found in the streets and opened fire from speeding vehicles at people watching from windows of their homes.
In a sign of the extent of the breakdown in Gadhafi's regime, one of his closest associates, Abdel Fattah Younis, his interior minister and commander of the powerful Thunderbolt commando brigade, announced in Benghazi that he was defecting and other armed forces should join the revolt.
"I gave up all my posts in response to the February 17 Revolution and my conviction that it has just demands," Younis, who was among the army officers who joined Gadhafi in his 1969 coup, told Al-Jazeera, referring to the date of the start of the protests.
The performance by Gadhafi on state TV Tuesday night went far beyond even the bizarre, volatile style he has been notorious for during nearly 42 years in power. Swathed in brown robes and a turban, wearing reflective sunglasses, he at times screamed, his voice breaking, and shook his fists - then switched to reading glasses to read from a green-covered law book, losing his train of thought before launching into a new round of shouting.
He spoke from behind a podium in the entrance of his bombed-out Tripoli residence hit by U.S. airstrikes in the 1980s and left unrepaired as a symbol of defiance.
At times the camera panned back to show the outside of the building and its towering monument of a gold-colored fist crushing an American fighter jet. But the view also gave a bizarre image of Gadhafi, waving his arms wildly alone in a broken-down lobby with no audience, surrounded by torn tiles dangling from the ceiling, shattered concrete pillars and bare plumbing pipes.
"Libya wants glory, Libya wants to be at the pinnacle, at the pinnacle of the world," he proclaimed, pounding his fist on the podium. "I am a fighter, a revolutionary from tents. ... I will die as a martyr at the end," he said, vowing to fight "to my last drop of blood."
Gadhafi portrayed the protesters as misguided youths, who had been given drugs and money by a "small, sick group" to attack police and government buildings. He said the uprising was fomented by "bearded men" - a reference to Islamic fundamentalists - and Libyans living abroad.
He urged supporters to take to the streets to attack demonstrators, saying police would not interfere.
"Go out and fight them," he added, urging youth to form local committees across the country "for the defense of the revolution and the defense of Gadhafi."
"Forward, forward, forward!" he barked at the speech's conclusion, pumping both fists in the air as he stormed away from the podium. He was kissed by about a dozen supporters, some in security force uniforms. Then he climbed into a golf cart-like vehicle and puttered away.
In New York, Libya's deputy U.N. ambassador Ibrahim Dabbashi, who has called for Gadhafi to step down, said he had received information that Gadhafi's collaborators have started "attacking people in all the cities in western Libya." He said those being attacked are unarmed. He said Gadhafi was using foreign mercenaries to fight protesters.
"I think the genocide has started now in Libya," Dabbashi said. "The Gadhafi statement was just code for his collaborators to start the genocide against the Libyan people. It just started a few hours ago. I hope the information I get is not accurate but if it is, it will be a real genocide."
Libyans were critical of what they saw as the lack of a forceful international response.
Dabbashi said the Security Council statement was "not strong enough" but was "a good step to stopping the bloodshed."
Gadhafi's call for a popular attack on protesters reflected the deeply unstable nature of the system he has created over his rule - the longest of any current Arab leader. He has long kept his military and other security forces relatively weak, fearing a challenge to his rule and uncertain of loyalties in a population of multiple tribal allegiances.
So far, the crackdown has been waged chiefly by militias and so-called "revolutionary committees," made up of Libyans and foreign fighters, many hired from other African nations.
Many army units in the east appear to have sided with protesters, and other more institutional parts of his regime have weakened. A string of ambassadors abroad have defected, as has the justice minister.
Protesters claim to control a string of cities, from the Egyptian border in the east - where guards at the crossing fled - to the city of Ajdabiya, about 450 miles (725 kilometers) farther west along the Mediterranean coast, said Tawfiq al-Shahbi, a protest organizer in the eastern city of Tobruk.
Ajdabiya is a key city near the oil fields of central and eastern Libya. Protesters and local tribesmen were protecting several of the fields and facilities around the city, said one resident, Ahmed al-Zawi.
Residents are also guarding one of Libya's main oil export ports, Zuweita, and the pipelines feeding into it, he said. The pipelines are off and several tankers that had been waiting in the port to load left empty, said al-Zawi, who said he visited Zuweita on Tuesday morning.
The first major protests to hit an OPEC country - and major supplier to Europe - sent oil prices to $95.42 per barrel. Only a small amount of Libya's oil production appeared to have been affected, though analysts fear that revolts will spread to OPEC heavyweights like Iran. Libya holds the most oil reserves in Africa.
Two oil companies on Tuesday suspended production in the country: Italy's Eni - the biggest energy producer in Libya, producing about a quarter of its exports - and Spain's Repsol-YPF, which produced 34,777 barrels in the country last year, about 3.8 percent of national output. A string of international oil companies have begun evacuating their expatriate workers or their families.
In the eastern cities of Tobruk and Benghazi, protesters raised the pre-Gadhafi flag of Libya's monarchy on public buildings.
Protesters over the weekend overran police stations and security headquarters in Benghazi, taking control of the streets.
In Benghazi, celebratory residents organized themselves into units to protect property and manage traffic after pro-Gadhafi forces fled, said Farag al-Warfali, a banker. A committee was set up to organize and distribute the use of weapons confiscated from government warehouses, recruiting policemen and officers to carry the weapons for city protection, fearing a new attack.
"These are his dying words. He is a criminal and is ready to do anything. But we are ready for him," al-Warfali said of Gadhafi's speech. "Besides, most of his officers have deserted him anyway.
He only has the mercenaries left."
Since Sunday, the fiercest fighting has been in Tripoli, the center of Gadhafi's rule.
At least 62 people were killed in violence in the capital since Sunday, according to the New York-based Human Rights Watch, but it cautioned that that figure came from only two hospitals. That comes on top of at least 233 people killed across the so far in the uprising, counted by the group from hospitals around the country.
Tripoli residents on Tuesday were recovering from the militia rampage through multiple neighborhoods that began the night before and lasted until dawn. Some resident ventured out to find stores open for food, wary of militia attacks.
One man in his 50s said residents of his neighborhood were piling up roadblocks of concrete, bricks and wood to try to slow attackers. He said he had seen several streets with funeral tents mourning the dead.
The night before, he had spent barricaded in his home, blankets over the windows - sitting with a kitchen knife on the table in front of him - as militiamen opened fire in nearby districts.
Buses unloaded militia fighters in several locations, he said.
Others sped in vehicles with guns mounted on the top, opening fire, including at people watching from windows. "I know of two different families, one family had a 4-year-old who was shot and killed on a balcony in the eastern part of the city, and another lady on the balcony was shot in the head," he said.
He, like other residents, contacted by The Associated Press, spoke on condition of anonymity for fear of retaliation.
One of the heaviest battlegrounds was the impoverished, densely populated district of Fashloum. There, militiamen shot any "moving human being" with live ammunition, including ambulances, so wounded were left in the streets to die, one resident said.
He said that as he fled the neighborhood Monday night, he ran across a group of militiamen, including foreign fighters. "The Libyans (among them) warned me to leave and showed me bodies of the dead and told me: `We were given orders to shoot anybody who moves in the place,"' said the resident.
He and other residents described dozens of bodies still in the street at daybreak Tuesday.
The head of the U.N. human rights agency, Navi Pillay, called for an investigation, saying widespread and systematic attacks against civilians "may amount to crimes against humanity."
In the early hours of Wednesday, several Libyan military officers held a news conference with Libyan journalists broadcast on state television in what they described as an effort to set the record straight on a number of issues.
Lt. General Jibril al-Qadiki, an air force pilot, denied reports of airstrikes on civilians and said there had been strikes but only on ammunition warehouses after "rebels" used them. He named four storage area in eastern Libya in desert areas, and insisted there were no people in those areas.
He also accused western countries, including the U.S., of providing logistics to the protesters aiming to "destroy Libya."