"The decision has been taken. Prepare yourselves. We will arrive tonight," Gadhafi said on state television.
"We will chase the traitors from Benghazi," he told his troops. "Destroy their fortifications. Show them no mercy. The world needs to see Benghazi free."
Meanwhile, he said "those who surrender and throw down their arms will be saved."
Sticking to recurring claims throughout the month-old rebellion that Al-Qaeda is behind it, Gadhafi said "we will hunt down the miscreants and bearded ones that have destroyed out country and we will punish them without mercy."
"We will also punish the mercenaries who have served them," he added, without saying to whom he was referring.
Gadhafi said the insurgents "take their strength from lies, and you do not have to spare them."
Touching on another recurring theme of his public statements about the rebels, he said they needed to be "hunted down in every neighbourhood, every street, every house."
Gadhafi, who came to power in a bloodless 1969 coup against Libya's monarchy, said "I freed Benghazi with my rifle, and Benghazi will not betray me. Tomorrow Benghazi will be free."
He accused the rebels of using people who had fled from prisons, criminals and murderers to do the "traitorous acts."
This "handful of drug addicts and criminals are in the process of making a racket so that the Americans and the Europeans can come into hour houses, humiliate you and stain your honour."