News that Libyan strongman Muammar Gaddafi was killed in his hometown Sirte sparked scenes of wild joy among the ranks of new regime fighters who crushed his final bastion of support.

"We did it! We did it!" chanted the fighters overcome with emotion, exchanging well-wishes, hugs and handshakes against a backdrop of intense celebratory gunfire.

A phone video message purporting to show Gaddafi's dead body spread like wild fire among National Transitional Council fighters in the Mediterranean city before the strongman's death was officially announced.

The blurry video showed what appeared to be Gaddafi's corpse, dressed in khaki, with blood oozing from his face and neck before fighters drag and load it onto a pick-up truck.

Fighters flashed the V for victory sign, yelled "Allahu Akbar" (God is greatest) and chanted revolutionary slogans at the news of the strongman's demise moments after the city came under their full control.

Former rebels unleashed a deafening salvo of machine gun and rocket fire after overruning the final pockets of resistance in Sirte, where diehard loyalists fought and former regime officials hid.

Men fell to their knees and kissed the ground at the news of the Gaddafi's death while others came together in payer at the main intersections celebrating the end of an almost two-month offensive on Sirte.

The roar of gunfire - once a sign of fierce combats - continued unabated after the fall of Sirte was officially declared while car speakers blared the new regime's national anthem and revolutionary songs.

"Every inch of the city is liberated," said fighter Abdul Matlub Saleh. "The gunfire that you are hearing is all celebration," news.com.au reported.