Syrian government forces advanced on the northern Islamic State-held city of al-Bab on Monday, cutting off the last supply route that connects it to militant strongholds further east towards Iraq, a monitor said, Reuters reported.
Islamic State militants in the area are now effectively surrounded by the army from the south and by Turkish-backed rebels from the north, as Damascus and Ankara race to capture the largest Islamic State stronghold in Aleppo province.
The Syrian Observatory for Human Rights, a British-based war monitor, said the army and allied militia made gains southeast of al-Bab overnight, and fought the militants there on Monday.
Backed by air strikes, they severed a road that links the city to other Islamic State-held territory in Raqqa and Deir al-Zor provinces, it said.
A military commander in the alliance fighting in support of President Bashar al-Assad said Islamic State was encircled.
"There is one narrow passage left out of al-Bab," the commander said. Government forces now had most of it "within close firing range".
The Syrian army's advance towards al-Bab risks triggering a confrontation with the Turkish military and its allies - rebel groups fighting under the Free Syria Army banner - which have been waging their own campaign to take the city.
In three weeks, Syrian army units moved to within 6 km (4 miles) of al-Bab, as Damascus seeks to stop its neighbor, Turkey, penetrating deeper into a strategic area of northern Syria.
"It's clear the regime is in a hurry to reach al-Bab," said Mustafa Sejari, a senior rebel official in the FSA group Liwa al-Mutasem. The Turkish-backed rebels, who have had the city in their sights for months, would fight government forces if they got in the way, he said.
Turkey launched its campaign in Syria, "Euphrates Shield", in August to secure its frontier from Islamic State and halt the advance of the powerful Kurdish YPG militia.
Northeast of the city, Turkish troops and FSA rebels, backed by Turkish air strikes, clashed on Monday with Islamic State around the town of Bazaa, the Observatory said. Turkish-backed forces had briefly captured the town before suicide bombers pushed them out on Saturday.