Three hundred civilians are said to have been killed and more than 1,000 injured in fierce fighting between rebels and government forces in the Liberian capital, Monrovia.
Ordinary people are desperate for a haven from the violence
Health Minister Peter Coleman told the BBC the casualties were the result of "indiscriminate shelling" by rebel forces.
Up to 250,000 people are sleeping rough seeking some kind of safety from fighting in the suburbs.
Many people have fled to diplomatic missions, schools and even the national football stadium in search of shelter, but the health ministry said at least nine people died on Wednesday when a US diplomatic compound was hit by rockets.
Fighters loyal to President Charles Taylor have pushed rebels back to the outskirts of the Liberian capital, Monrovia, the defence minister Daniel Chea said.
Fighting is now taking place around St Paul's bridge, some 10 kilometres from the city centre, he added.
US President George W Bush has called on Mr Taylor to step down to avoid further bloodshed, and said the US supported peace talks between the government and the rebels.
However Mr Taylor - a veteran of years of conflict and indicted by a United Nations-backed war crimes tribunal - has vowed to fight to the finish.
Battle in suburbs
Residents fear a repeat of the brutal street fighting seen in the city during the 1990s civil war after a ceasefire agreed last week was effectively ended.
Correspondents say the number of explosions in the centre of Monrovia is dropping off, but the battle continues in the suburbs and the number of casualties is still rising.
Aid agencies say they are working against the clock to install health and water facilities to prevent outbreaks of disease in the impromptu camps, while health officials said the main hospital is crowded to bursting point.
As the violence raged, Sir Jeremy Greenstock, the British Ambassador to the UN, proposed that the US lead a peacekeeping force. Liberia was founded by freed American slaves.
But the US ambassador in Monrovia, John William Blaney, told the BBC that the parties had to stop fighting first.
A high-level diplomatic mission from the Security Council, including Sir Jeremy, is travelling to Ghana for talks with Liberians representing various factions. They are scheduled to go to Monrovia itself if security allows.
Meanwhile, the mediator of the talks in Ghana, former Nigerian leader, General Abdulsalami Abubakar, says he is looking at a way of getting round the indictment against Mr Taylor.
The UN-backed Special Court for Sierra Leone issued an international arrest warrant against him, accusing him of committing war crimes and backing brutal rebels during the 10-year civil war.
Mr Taylor has says there can be no peace deal while he faces arrest.
'Sound of the AK-47'
On Tuesday, the rebels announced that they had pulled out of peace talks after President Taylor said that he would not step down until next January at the earliest.
Indicted on war crimes charges
Under UN sanctions
Won 1997 elections
The Liberians United for Reconciliation and Democracy (Lurd) rebels, which control some two-thirds of the country, have said they will not stop until they take full control of Monrovia.
"If Mr Taylor wants peace, we will give him peace. But the only sound Mr Taylor understands is the sound of AK-47 and that is what we are playing for him," Lurd spokesman Mohammed Kamara told the BBC.