NATO warplanes have been raising the pace of their air strikes on Tripoli, with Gaddafi's Bab al-Aziziyah compound in the center of the city being hit repeatedly.
Britain said on Sunday it was to add "bunker-busting" bombs to the arsenal its warplanes are using over Libya, a weapon it said would send a message to Gaddafi that it was time to quit.
"Our operation in Libya is achieving its objectives ... We have seriously degraded Gaddafi's ability to kill his own people," Rasmussen told a NATO forum in Varna, Bulgaria.
"Gaddafi's reign of terror is coming to an end. He is increasingly isolated at home and abroad. Even those closest to him are departing, defecting or deserting."
Britain and other NATO powers are ratcheting up their military intervention in Libya to try to break a deadlock that has seen Gaddafi hold on to power despite a rebel uprising against his four-decade rule and weeks of air strikes.
Gaddafi denies attacking civilians, saying his forces were obliged to act to contain armed criminal gangs and al Qaeda militants. He says the NATO intervention is an act of colonial aggression aimed at grabbing Libya's plentiful oil reserves.
South African leader Jacob Zuma was expected to arrive in Tripoli on Monday, his second visit since the conflict began, to try to broker a ceasefire on behalf of the African Union.
Zuma's previous visit made little progress because Gaddafi has refused to relinquish power while rebel leaders say that is a pre-condition for any truce deal.
BUNKER-BUSTERS
Gaddafi's foreign minister held talks in Tunisia on Saturday with Lord David Trefgarne, a former British government minister, according to a former British ambassador to Libya who took part in the discussions.
The ex-ambassador refused to disclose what they talked about and Britain's government said neither it not any intermediaries were talking to officials loyal to Gaddafi.
Britain said the Enhanced Paveway III bombs, each weighing nearly a tonne and capable of penetrating the roof or wall of a reinforced building, had arrived at the Italian air base from where British warplanes fly missions over Libya.
"We are not trying to physically target individuals in Gaddafi's inner circle on whom he relies, but we are certainly sending them increasingly loud messages," British Defense Secretary Liam Fox said on Sunday in a statement.
"Gaddafi may not be capable of listening but those around him would be wise to do so."
The military alliance says it is acting under a mandate from the United Nations to protect civilians from attack by security forces trying to put down the rebellion against Gaddafi.
But the more aggressive tactics risk causing divisions within the fragile alliance backing the intervention, and could also lead to NATO being dragged closer toward putting its troops on Libyan soil, something it is anxious to avoid.
On Sunday Al Jazeera television station broadcast video footage of what it said were foreign forces, possibly British, on the ground near the rebel-held city of Misrata.
There were a number of armed men, some wearing sunglasses and keffiyahs, or traditional Arab headscarves, who moved off when they realized they were being watched, the footage showed.
Further deepening their involvement, Britain and France have said they will deploy attack helicopters over Libya to better pick out pro-Gaddafi forces. Helicopters are more vulnerable to attack from the ground than high-flying warplanes.
ROCKETS FIRED
Rebels control the east of Libya around the city of Benghazi, Libya's third-biggest city Misrata, and a mountain range stretching from the town of Zintan, 150 km (95 miles) south of Tripoli, toward the border with Tunisia.
Helped by NATO air support, the rebels have been able to push back attacks by pro-Gaddafi forces but in many places they are still under bombardment and cut off from supplies.
A Reuters reporter in Zintan said he heard about a dozen rockets, fired by government forces, strike the outskirts of the town on Sunday. There were no reports of casualties.
Forces loyal to Gaddafi have cut electricity supplies to much of the region, causing problems with water supplies because there is no power to pump water from underground wells.
In Misrata, a rebel spokesman said an attack by forces loyal to Gaddafi on the western suburb of Dafniyah had been repelled.
Libyan officials took journalists on Sunday to a school in Tripoli near the part of Gaddafi's Bab al-Aziziyah compound that had been hit by NATO planes during air strikes on Saturday.
There was little evidence of damage, but head teacher Hamid Miftar said the nearby blast had broken one or two windows and terrified the children as they sat for the first day of exams.
"Imagine the scene, with children this age in a school of this capacity. They all tried to run out at once," he said. "These are civilians."
As reporters toured classrooms, teachers led the schoolchildren in chants of "Allah, Muammar, Libya together!."