Moammar Gadhafi is believed to be hiding near the western town of Ghadamis near the Algerian border under the protection of Tuareg tribesmen, a senior Libyan military official said.
"One tribe, the Tuareg, is still supporting him and he is believed to be in the Ghadamis area in the south," Hisham Buhagiar, a senior military official of the Libya's new leadership, told Reuters by telephone late on Tuesday.
Buhagiar is the coordinator of the hunt for Gadhafi.
Revolutionary command spokesman Abdel-Rahman Busin said that the Tuaregs were supporting Gadhafi "probably because he's paying them."
Buhagiar said the ousted Libyan leader was believed to have been in the southern town of Samnu a week ago before moving to Ghadamis, which lies 345 miles southwest of Tripoli.
He said Gadhafi's son Saif al-Islam was in Bani Walid and another son, Mutassem, was in Sirte, the family's home town.
"They are both thinking about leaving Libya maybe to Niger," Buhagiar added.
Sirte, one of the last bastions of support for Gadhafi, is encircled by forces of Libya's ruling National Transitional Council (NTC) and under bombardment from NATO warplanes.
Taking Sirte would bring the NTC closer to gaining control of the whole country, a goal that has eluded it more than a month after its fighters seized the capital.
Buhagiar said most tribes in the south were against Gadhafi except for the Tuareg, who still support him.
"There has been a fight between Tuareg tribesmen who are loyal to Gadhafi and Arabs living there (in the south). We are negotiating. The Gadhafi search is taking a different course," Buhagiar said, without elaborating.
Gadhafi's daughter Aisha, her brothers Hannibal and Mohammed, their mother Safia and several other family members fled to Algeria in August and have lived there since.
$16 million in cashMeanwhile, Libya's transitional government , which has been beset by fighters loyal to Gadhafi, hoping to bolster support for revolutionary forces.
Journalists on Tuesday accompanied the oil and finance minister, Ali al-Tarhouni, and the cash on the first flight to touch down in Sabha since a NATO enforced no-fly zone order in March.
Revolutionary forces have gained control of much of the area but still face heavy resistance.
"The forces inside these areas are not opposed to joining us but they do not want to disarm," said Ahmed Bashir, spokesman for Libya's National Transitional Council in Sabha. "They have the weapons and no manpower. We have the manpower and lighter weapons."
Gadhafi's supporters are still putting up a fierce fight on three fronts. In addition to Sirte, there is resistance in the area of Bani Walid, southeast of the capital, and in pockets in the country's vast desert south, including Sabha.
In Sabha, revolutionaries are based in the city's largest neighborhood, al-Gurtha. They have set up a national council office and checkpoints on roads leading to areas where Gadhafi loyalists refuse to hand over their weapons.
Residents are able to cross checkpoints into Gadhafi loyalist-held areas, but only if they have family inside, and even then they risk being accused of being Gadhafi supporters.
Bashir said the area has no Gadhafi brigades, but there are worries that armed Gadhafi loyalists may ambush revolutionary forces from the desert.
