Forces loyal to Ivory Coast's UN-recognised president say they have captured the besieged incumbent's residence in the main city of Abidjan.
Alassane Ouattara's government said its troops had overrun the home of Laurent Gbagbo, who refuses to step down, but his whereabouts are unclear.
Heavy weapons fire rocked the city early on Tuesday.
Hours earlier, UN and French helicopters attacked targets near the presidential residence.
Mr Ouattara's representative in Paris, Ali Coulibaly, told France Info radio on Tuesday that Mr Gbagbo was now negotiating his surrender.
'War of psychology'
Mr Gbagbo has refused to leave office even though the Ivorian election commission declared him the loser of November's run-off vote, and the UN certified the result.
The BBC's Andrew Harding, near Abidjan, says it looks like endgame for the incumbent president.
But he says the fighting has reached a new level of ferocity and there are reports pro-Gbagbo forces have seized two bridges in the city centre, which would suggest the battle is not all one way.
Forces loyal to Mr Ouattara, a former International Monetary Fund economist, began a dramatic military offensive last week, sweeping in from the north and west.
About four million civilians have been trapped by days of fighting and looting in Abidjan.
There is no independent confirmation of reports that pro-Ouattara forces have taken Mr Gbagbo's compound.
"The residence is on many levels," Patrick Achi, a spokesman for Mr Ouattara, told the BBC.
"People have seen that Gbagbo was in the residence but they are still looking for him."
Asked what would happen if Mr Gbagbo was captured, he said he would be arrested and "brought to justice".
One of Mr Gbagbo's advisers in London, Abdon George Bayeto, dismissed claims the residence had fallen.
"This is all propaganda and it is all a war of psychology," he said.
Mattresses on windows
On Monday evening, UN and French helicopters attacked Mr Gbagbo's arsenal, firing missiles at his heavy weapons and military camps.
UN Secretary General Ban Ki-moon said the raids were to stop attacks on civilians, not a declaration of war on Mr Gbagbo.
Residents living nearby shielded their windows with mattresses as explosions rocked the centre of Abidjan.
Several thousand pro-Ouattara fighters meanwhile entered the city from the north in a convoy of vehicles.
UN Mi-24 helicopters are reported to have bombarded five targets: Mr Gbagbo's residence, a republican guard base, state television headquarters, a paramilitary base and the Akouedo arms depot.
UN peacekeeping chief Alain Le Roy said that a UN Security Council resolution authorised such action.
The use and calibre of heavy weapons by Gbagbo forces had, he said, escalated sharply in recent days.
The UN mission in Ivory Coast (Unoci) had also been under almost continuous attack, he said.
French President Nicolas Sarkozy said in a statement he had authorised the 1,600-strong French Licorne force in the country to help.
Ivory Coast gained independence from France in 1960, but has had French peacekeepers in the country since its civil war almost a decade ago.
Post-election violence in Ivory Coast has left hundreds dead and forced up to one million people to flee.
The UN has sent an envoy to investigate a massacre of hundreds of civilians in the western town of Duekoue last week.
Each side has blamed the other for the killings, which the International Committee of the Red Cross says claimed at least 800 lives.
