In Colonel Muammar Gaddafi's Libya, when the little lies aren't working anymore, then it is time to roll out the bigger untruths. On Sunday, the regime effectively claimed to have won the war against the rebels trying to dislodge it.

For those who remain loyal to Gaddafi it was the signal to swamp the streets of Libya's capital Tripoli firing their weapons in the morning air.

Zawiyah, to the west of the capital, and Misrata, down the coast to the east, had fallen, said state television. Ras Lanuf was under government control. A government minder told the Guardian that Tobruk had fallen to forces loyal to Gaddafi. The opposition's de facto capital Benghazi, some insisted, was surrounded.

Challenged about the truthfulness of Tobruk's "fall" the minder did not look embarrassed. Rather he looked baffled that anyone could not believe the assertion.

But on Sunday, parts of Zawiyah, 30 miles west of Tripoli and the most vulnerable of the opposition-held cities, were still under opposition control. Neither had Ras Lanuf, Misrata or Tobruk been taken.

The gunfire began just before dawn. It sounded like combat at first – and in the world of smoke and mirrors that is Tripoli it might have been. Within an hour or so it had morphed into shots of celebration.

As the government reports reached Tripoli's Green Square, it was transformed into an outdoor celebration of the regime by members of the security forces with their guns and families. Even some of the children had been given guns to play with.

Sitting on top of one car were two small boys, one dressed in a Teenage Mutant Ninja Turtle outfit fondling a revolver. His brother – a little bigger than him – had been given an AKM assault rifle, his small fingers barely reaching around the stock of the weapon.

There were old men with guns, teenagers with guns, women with guns, soldiers with guns and men in plain clothes with guns, all of them firing in the air.

One man in the square who spoke to journalists and said that he worked for the government declared: "We have beaten all of the enemy. You have to know we support our leader. Everyone here is for Muammar Gaddafi."

He would not give his name or profession but was seen later driving across the square in a white four-wheel drive with a uniformed man sitting by his side.

Another young man, who said he was a student, claimed they had beaten "al-Qaida" in Zawiyah, but when challenged by reporters who said they had seen no Islamists in the town, he claimed that al-Qaida was directing the operations in the background "by mobile phone".

In one of the celebratory traffic jams, conveniently placed outside the Rixos hotel where most of the international media are staying, one young man was honking his horn and waving a green flag.

Asked what he was celebrating, he replied: "Victory." Pressed for details, he admitted he had no idea which towns had fallen.

"These are celebrations because government forces have taken control of all areas to Benghazi and are in the process of taking control of Benghazi," Mussa Ibrahim, a government spokesman, said, referring to Libya's rebel-controlled second largest city, 400 miles east.

"I assure you ... there is no fighting going on in Tripoli. Everything is safe. Tripoli is 100% under control. What you are hearing is celebratory fireworks. People are in the streets, dancing in the square," said Ibrahim. But he added: "I would like to advise not to go there for your safety."

The Libyan deputy foreign minister, Khaled Kaim, had told reporters late on Saturday that Zawiyah was quiet and peaceful. "We hope by tomorrow morning life will be back to normal."

But even within the regime the big lie could not be sustained – as officials contradicted themselves and state television.

Another spokesman, Abdul Majid Al Dursi, later denied that the towns of Tobruk, Brega, and Misrata had fallen, although he said the government was close to retaking Misrata, where government and opposition forces have been fighting for the airbase.

The reality is that the government had not retaken Zawiyah at the time of writing – areas of the city are still in the hands of the opposition forces, who have held off better armed and more numerous opponents.

All of which begs the question of the purpose of Sunday's display.

One theory is that it was designed to bolster the morale of the security forces who are being asked to fire on fellow Libyans – to show them, ahead of any real victories, what victory might look like and how grateful the regime and its supporters will be.