In an audio address broadcast on state television, Mr. Gadhafi said there is "no justification" for the interference by the United States and European nations. He said the air strikes amounted to terrorism.
The Libyan leader said he has opened up all weapons depots and that all Libyans are now armed and ready to fight. He said the foreign forces will be defeated.
The U.S. and European strikes, which were launched Saturday, are aimed at enforcing a United Nations-mandated no-fly zone.
A U.S. Defense Department official said more than 112 Tomahawk missiles were fired from U.S. and British ships and submarines in the Mediterranean. More than 20 targets deemed a direct threat to coalition forces and Libyan civilians were hit in the attacks.
Libyan state television said 48 people were killed and 150 wounded in the allied assault.
Mr. Gadhafi denounced the strikes as "unjustified crusader aggression." The Libyan leader vowed to retaliate against military and civilian targets in the Mediterranean, saying the region had been turned into a "real battlefield."
Thousands of Libyans gathered Saturday in the highly-fortified compound where Mr. Gadhafi lives in the Libyan capital, Tripoli, to form a human shield against possible air strikes.
Anti-aircraft fire could be heard overnight in the capital.
In Brazil, visiting U.S. President Barack Obama said Mr. Gadhafi had given the West no choice but to take military action. British Prime Minister David Cameron said in London that the action against Mr. Gadhafi was "necessary, legal and right.''
French warplanes were the first to pound Libyan targets Saturday. The military action was decided at an emergency international summit in Paris earlier in the day.
French President Nicolas Sarkozy said representatives of the U.N., European Union, Arab League and Western powers had agreed at their Paris summit to use all necessary means, including military force. He said they agreed to carry out provisions in the U.N. Security Council resolution, approved Thursday, that declared the no-fly zone over Libya.
Pro-government forces in Libya had advanced against rebels on two fronts Saturday. Insurgents in their eastern stronghold of Benghazi said government loyalists had been pushing forward, in apparent disregard of a cease-fire Mr. Gadhafi declared Friday.
There were also reports of fighting south of Benghazi in Adjabiya as well as in Misrata, a rebel-held city in western Libya near Tripoli. The Reuters news agency quotes residents who say nine people were killed in the city on Saturday as a result of government shelling and sniper fire.
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