BENGHAZI, Libya – The spokesman for Moammar Gadhafi’s collapsing government on Wednesday rejected a rebel ultimatum to surrender or face an all-out military assault, and two of Gadhafi’s sons sent mixed signals from hiding about dealing with the rebel government.

A senior rebel official coordinating the hunt for Gadhafi, Hisham Buhagiar, said the deposed Libyan leader is believed to be either in the area of Bani Walid, a desert stronghold of Gadhafi loyalists 104 miles southeast of Tripoli, or in Sirte, his hometown and tribal power base on the Mediterranean coast 278 miles east of the capital, Reuters news agency reported. Both areas were hit Tuesday by NATO airstrikes, and rebels say they are closing in on Sirte from the east and west.

Libya’s Transitional National Council — the de facto government of the country since the rebels gained control of key areas last week and Gadhafi disappeared from view – has said loyalists have until Saturday to relinquish control over the pockets of the country where they still hold sway.

In response, Gadhafi spokesman Moussa Ibrahim dismissed the council as an unlawful group and said Gadhafi’s son Saadi was willing to negotiate and form a transitional government in coordination with the rebels — something opposition leaders have made clear is unacceptable to them.

“No dignified, honorable nation would accept an ultimatum from armed gangs,” Ibrahim said in a phone interview.

According to al-Arabiya television, Saadi Gadhafi said he contacted Belhaj with authorization from his father in an effort to end the fighting in Libya.

“We were talking about negotiations based on ending bloodshed,” he said. He added that the Gadhafi loyalists recognize the rebel council as “a legal party” but insist that “we are also the government and a legal negotiating party.”