"It is not true that Mutassim was captured," said Wesam Bin Hamid, brigade commander of the Martyrs of Free Libya Brigade, one of the new regime's main units inside Gaddafi’s hometown.
"But some prisoners we have captured are saying that Gaddafi [himself] is in Sirte," Bin Hamid added.
A top adviser to the new Libyan leadership, Abdelkarim Bizama, had said in Tripoli late on Wednesday that the feared Mutassim, who served as Gaddafi’s national security chief, was in custody.
"Mutassim Gaddafi was captured at Sirte and was transferred to Benghazi," Libya's second-largest city where significant parts of the new leadership remain based, Bizama told AFP.
"We did not announce the capture earlier to avoid that [his family or aides] try to free him," he added.
New regime fighters said they had captured the Gaddafi regime's top cleric on Wednesday as he attempted to flee Sirte with his beard shaven off to disguise his appearance.
Khaled Tantoosh, who served as the mufti of Libya under Gaddafi, made broadcasts in support of the fugitive strongman through the long uprising that ended his 42-year rule.
"We captured him yesterday morning," said fighter Abdu Salam, who said he stopped the cleric's vehicle with four comrades on the coast road west out of Sirte.
"He had completely changed his appearance. He was clean-shaven and was driving out and trying to escape to Tripoli," he said.
The brigade commander said the whole of the east of Sirte was now in new regime hands and that the final pockets of resistance were being mopped up in the west.
"The entire operation in east Sirte is complete," Bin Hamid said.
"There is a little resistance - in one or two neighbourhoods fighting is going on. We are giving backup support to the fighters in the west," he added.
Last-ditch resistance by Gaddafi forces is focused on two residential areas in the northwest of the Mediterranean coastal city, the Dollar and Number Two neighbourhoods.
An AFP correspondent reported rocket fire, and machinegun and small arms exchanges in both neighbourhoods on Thursday morning.