AJDABIYAH, Libya (Reuters) - Muammar Gaddafi's jets bombed Libyan rebels Monday in a counter-offensive that has pushed them back 100 miles in a week, far outpacing diplomatic efforts to impose a no-fly zone to help the rebels.

There is now a very real possibility that by the time world powers agree on a response to the conflict, Gaddafi's forces may already have won.

"Fundamental questions need to be answered, not just what we need to do, but how it's going to be done," said Russian ambassador Vitaly Churkin.

"If there is a no-fly zone, who is going to implement (it) ... Without those details or answers to those questions, it's very hard to make a responsible decision."

Meanwhile, Libyan government artillery and tanks retook the small town of Zuwarah, 120 km (70 miles) west of Tripoli, after heavy bombardment, resident Tarek Abdallah said by telephone.

Perhaps more significantly, they were shrinking the swathe of eastern Libya still held by revolutionary forces.

They took the important eastern oil terminal town of Brega late Sunday, and Monday flew behind rebel lines to bomb Ajdabiyah, the only sizeable town between Brega and the rebel stronghold of Benghazi.

ROAD TO BENGHAZI

Ajdabiyah commands roads to Benghazi and Tobruk that could allow Gaddafi's troops to encircle Libya's second city and its 300,000 inhabitants.

Soliman Bouchuiguir, president of the Libyan League for Human Rights, said in Geneva that if Gaddafi's heavily armed forces broke through to attack Benghazi "There will be a real bloodbath, a massacre like we saw in Rwanda."

France was lobbying foreign ministers of the Group of Eight big powers in Paris, as well as members of the U.N. Security Council in New York, to impose a no-fly zone

Saturday's endorsement from the Arab League satisfies one of three conditions set by the Western NATO alliance for it to police Libyan air space, that of regional support. The other two are proof its help is needed and a Security Council resolution.

"Now that there is this Arab League statement, we do hope that it's a game changer for the other members of the council," said French U.N. ambassador Gerard Araud in New York.

Lebanese Ambassador Nawaf Salam, sole Arab representative on the council, said Lebanon wanted it to act as fast as possible.

"We think it is not only a legitimate request, it is a necessary request," he said. "Measures ought to be taken to stop the violence, to put an end to the ... situation in Libya, to protect the civilians there."

"The international community is dragging its feet," said Saad Djebbar, a London lawyer and expert on Libyan affairs.

News of humanitarian suffering or atrocities could be taken as a sign that help is needed. But while Human Rights Watch has reported a wave of arbitrary arrests and disappearances in Tripoli, hard evidence is so far largely lacking.

U.N. Deputy High Commissioner for Human Rights said Kyung-wha Kang said in Geneva that Gaddafi's government had "chosen to attack civilians with massive, indiscriminate force."

"Everyone here is puzzled as to how many casualties the international community judges to be enough for them to help," said rebel spokesman Essam Gheriani in Benghazi.

"Maybe we should start committing suicide to reach the required number. It is shameful."

U.S. UNDECIDED

If the Security Council eventually moved on to discussing a no-fly zone draft and approved it, enforcement would almost certainly fall largely to the United States.

Pentagon press secretary Geoff Morrell told MSNBC television that a no-fly zone was an option under consideration, but added:

"That is a decision, a political decision ultimately, that has not been taken."

Russia and China are even less enthusiastic, but U.N. diplomats said they would find it hard to veto a no-fly zone when the Arab League had requested it, and might abstain.

President Dmitry Medvedev Monday barred Muammar Gaddafi and his family from conducting financial transactions in Russia, a move that brings Moscow more in line with Western policy.

Foreign Minister Sergei Lavrov told reporters Russia would consider any proposal that comes before the Security Council.

He said Arab League leaders had indicated a zone could be imposed "with some restrictions, primarily with full respect for the sovereignty of Libya and without the use of weaponry to suppress air-defense facilities."

NATO member Turkey was more categorical.

"Military intervention by NATO in Libya or any other country would be totally counter-productive," Prime Minister Tayyip Erdogan told an international forum in Istanbul.

Philip Robins, a politics lecturer at Oxford University specializing in the Middle East, said the threshold for involvement in Libya was so high because there is a feeling that the Iraq war was a bad, unreasonable and illegitimate war."

"It is a big misfortune for the Libyan people," he said.

As the diplomatic wrangling continues, Gaddafi's tanks and warplanes have been more than a match for the rag-tag rebel force, especially in the desert terrain between major towns.

The only major city held by insurgents outside the east is Misrata, 200 km (130 miles) east of the capital. Rebels and residents there say an assault has been held up by infighting within the ranks of the besieging government forces.

"The fighting has stopped now. Early Monday we heard five shells after a fierce night of fighting and now it has stopped," Mohammed, one of Misrata's 300,000 residents told Reuters.

"We are not sure why it has stopped. Maybe they got tired or maybe one group won over the other. Things are not clear."

The government strongly denies the reports and it is impossible to verify them, but Gaddafi's troops do appear to have held off attacking Misrata for the last three days.

(Additional reporting by Maria Golovnina and Michael Georgy in Tripoli, Tom Pfeiffer in Benghazi, Mariam Karouny in Djerba, Tunisia, Tarek Amara in Tunis, James Regan in Paris, Louis Charbonneau at the United Nations; Writing by Jon Hemming and Kevin Liffey; Editing by Matthew Jones)