Rebels said a hail of Grad rockets fired by besieging forces into a residential district of Misrata, Libya's third largest city, had killed 23 civilians, mostly women and children.
Aid organizations warn of a humanitarian disaster in Misrata, the lone rebel bastion in western Libya, where hundreds of civilians are said to have died in a six-week siege.
NATO warplanes later launched strikes on the Libyan capital Tripoli. State television said there were civilian casualties.
Reuters correspondents heard four blasts and anti-aircraft fire, and saw plumes of smoke to the southeast.
Secretary of State Hillary Clinton expressed concern at a NATO meeting in Berlin over "atrocities" in Misrata but gave no hint Washington was prepared to re-engage in air strikes.
Reflecting concern at strains in the alliance over the bombing campaign, Clinton called for NATO to maintain "resolve and unity" against Muammar Gaddafi, saying he was trying to test Western determination.
Papering over differences, NATO foreign ministers pledged in a joint declaration to provide "all necessary resources and maximum operational flexibility" for the air campaign to maintain a "high operational tempo against legitimate targets."
But several allies rebuffed calls from France and Britain to contribute more to the air attacks, conducted under a United Nations mandate to protect civilians and U.S. officials said allied commanders had not requested greater resources.
"A massacre...will take place here if NATO does not intervene strongly," a rebel spokesman in Misrata told Reuters by phone. Reports of casualties are hard to verify independently because journalists cannot reach the area.
Al Jazeera television showed hundreds of Misrata residents demonstrating after the dawn attack. "The blood of martyrs will not be in vain," they chanted, waving the rebel flag.
MIGRANTS DESPERATE
The International Organization for Migration said a rescue ship had left Benghazi, in rebel-held east Libya, to begin evacuating 6,000 stranded migrants from Misrata, a lone rebel bastion in western Libya that has been under siege for weeks.
Many were dehydrated and weak and in "desperately worrying condition," it said. Migrants from Egypt, Niger, Bangladesh, Ghana, Sudan and Nigeria have been stranded in Misrata, living in the open for weeks with limited food and no clean water.
Five so-called BRICS emerging powers -- Brazil, Russia, India, China and South Africa -- voiced misgivings over NATO air strikes after talks in China and urged an end to the two-month civil war.
Their criticism contrasted with the first joint call for Gaddafi's overthrow from a "contact group" of Middle Eastern and Western countries meeting in Qatar on Wednesday, which demanded the veteran ruler leave power and vowed support for the rebels.
Some military analysts believe U.S. specialist ground attack aircraft could tip the balance in Libya, allowing precision strikes on Gaddafi's armor with less risk of hitting civilians. But Washington has taken a back seat after handing command to NATO on March 31.
French Defense Minister Gerard Longuet has said Gaddafi's attacks cannot be stopped without U.S. participation in strikes on his tanks and artillery. Paris cited Spain, Italy, the Netherlands and Sweden among allies who could do more.
But Spain said it had no plan to join the seven NATO states that have conducted ground strikes while Italy, Libya's former colonial power, expressed reluctance to launch attacks.
Amid a flurry of diplomacy over Libya, U.N. Secretary General Ban Ki-moon, EU foreign policy chief Catherine Ashton, Arab League head Amr Moussa and officials from the African Union and Organization of the Islamic Conference discussed the war at a meeting in Cairo on Thursday.
A few dozen pro and anti-Gaddafi protesters demonstrated outside the meeting at Arab League headquarters. Police fired blank rounds to disperse the groups when they briefly clashed.
Ban expressed grave concern over the escalation of violence in Libya and called for a ceasefire and the relief of besieged cities. The longer fighting went on, the more difficult a political solution would be, he said.
FRUSTRATION
Britain and France are leading air strikes against Gaddafi's forces, but are frustrated by lack of operational support from their allies. NATO says it is still short of about 10 aircraft a day for strikes.
Both rebels and France, which first launched attacks against Gaddafi's forces, have accused NATO of not doing enough to stop bombardment of civilians, especially in Misrata.
NATO members are also divided over meeting a rebel request for weapons. Spanish Foreign Minister Trinidad Jimenez said this was not allowed under the U.N. resolution authorizing military action but other nations suggested it could be possible.
Diplomats said the rebels could be supplied covertly.
A U.S. official said there was no consensus on whether to arm the rebels, but reiterated President Barack Obama's statement that he "hasn't ruled it out and hasn't ruled it in."
The rebels said they were in talks with "friendly" countries to obtain arms. "I don't think there will be a problem getting weapons," national council spokesman Abdel Hafiz Ghoga told reporters in the rebel stronghold of Benghazi.
Qatar, a leading Arab supporter of the uprising, hinted on Wednesday that it might arm the rebels.
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