WRAPUP 11-UN okays military action on Libya; Gaddafi warns

* U.N. Security Council approves military action

* Gaddafi says no mercy for Benghazi

* Fighting rages along road to rebel stronghold

* U.S. official says pro-Gaddafi forces made big strides

(Updates with Security Council resolution)

By Maria Golovnina and Patrick Worsnip

TRIPOLI/UNITED NATIONS, March 17 (Reuters) - The United Nations authorised military action to curb Libyan leader Muammar Gaddafi on Thursday, hours after he threatened to storm the rebel bastion of Benghazi overnight, showing "no mercy, no pity".

"We will come, zenga, zenga. House by house, room by room," he said in a radio address to the eastern city.

Al Jazeera television showed thousands of Benghazi residents in a central square celebrating the U.N. vote, waving anti-Gaddafi tricolour flags and chanting defiance of the man who has ruled for four decades. Fireworks burst over the city.

Gaddafi had warned that only those who lay down their arms would be spared vengeance to be exacted on 'rats and dogs'.

"It's over. The issue has been decided," Gaddafi said. "We are coming tonight...We will find you in your closets. "We will have no mercy and no pity."

The U.N. Security Council passed a resolution endorsing a no-fly zone to halt government troops now around 100 km (60 miles) from Benghazi. It also authorised "all necessary measures" -- code for military action -- to protect civilians against Gaddafi's forces.

But time was clearly running short for the city that has been the heart of Libya's revolution. Residents said the Libyan air force unleashed three air raids on the city of 670,000 on Thursday and there has been fierce fighting along the Mediterranean coastal road as Gaddafi moves to crush the month-old insurrection.

French diplomatic sources said military action could come within hours, and could include France, Britain and possibly the United States and one or more Arab states; but a U.S. military official said no immediate U.S. action was expected following the vote.

Ten of the Council's 15 member states voted in favour of the resolution, with Russia, China and Germany among the five that abstained. There were no votes against the resolution, which was co-sponsored by France, Britain, Lebanon and the United States.

Rebel National Council head Mustafa Abdel Jalil told Al Jazeera television air strikes were essential to stop Gaddafi.

"We stand on firm ground. We will not be intimidated by these lies and claims... We will not settle for anything but liberation from this regime."

It was unclear if Gaddafi's threat to seize the city in the night was anything more than bluster. But at the very least it increased the sense that a decisive moment had come in an uprising that only months ago had seemed inconceivable.

Some in the Arab world sense a Gaddafi victory could turn the tide in the region, weakening pro-democracy movements that have unseated autocrats in Tunisia and Egypt and raised mass protests in Bahrain, Yemen and elsewhere. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

More on Middle East unrest: [nTOPMEAST] [nLDE71O2CH]

Western forces in region link.reuters.com/jen38r

Latest graphic: r.reuters.com/nym77r

Interactive factbox link.reuters.com/puk87r

Graphic on air bases link.reuters.com/zyk48r

Graphic on missile defences link.reuters.com/wem48r

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RETALIATION

By late evening, telephone lines to Benghazi and internet connections appeared to be cut.

Gaddafi's Defence Ministry warned of swift retaliation, even beyond Libyan frontiers, if the U.N. voted for military action against the oil-exporting nation.

"Any foreign military act against Libya will expose all air and maritime traffic in the Mediterranean Sea to danger and civilian and military (facilities) will become targets of Libya's counter-attack," the ministry said in a statement. (Additional reporting by a Reuters reporter in Benghazi, Michael Georgy in Tripoli, Mariam Karouny and Tarek Amara in Tunisia, Louis Charbonneau and Patrick Worsnip at the United Nations, John Irish in Paris; writing by Ralph Boulton; Editing by Louise Ireland)