The capture of Sheikh Miskeen in southern Daraa province is the latest victory for government forces, who have been on the offensive since ally Russia began strikes in the country in late September.
Russia's Foreign Minister Sergei Lavrov said Tuesday his country's intervention had helped "turn around" the situation in Syria, "reducing the territory controlled by terrorists."
Syria's army, in a statement, said the capture of Sheikh Miskeen on Tuesday was "a hard blow for terrorist groups" noting that it followed victories by "our brave soldiers in Latakia, Aleppo and Hama."
Sheikh Miskeen lies on a vital crossroads between Damascus to the north and the government-controlled city of Sweida to the east.
A Syrian security source earlier told AFP the town was a "launching pad" for rebel operations, and one of the opposition's "centres of gravity for the whole of Daraa province".
- Wrangling over talks -
He said seizing control of the town would sever a rebel supply route to areas under opposition control around Damascus.
Most of Daraa province is controlled by opposition forces, though the government holds parts of the provincial capital and a few villages in the northwest.
Sheikh Miskeen's capture comes after the government took the towns of Rabia and Salma from rebels in coastal Latakia province, backed by Russian air strikes and military advisors.
Russia began air strikes in support of the Syrian government on September 30, saying it was targeting the Islamic State group and other "terrorists".
But the opposition and activists accuse it of focusing more on Islamist and moderate rebels, and of killing civilians.
Moscow has rejected allegations of civilian deaths in its strikes as "absurd" and fiercely defended its intervention.
Lavrov also Tuesday dismissed reports that Russia had asked President Bashar al-Assad to step down.
"This is not true," he said. "No one asked for political asylum and no one offered anything of the kind."
The regime advances come as world powers push for a new round of peace talks scheduled to begin on Friday in Geneva, after a delay over who will represent Syria's opposition.
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A body representing key opposition groups and factions known as the High Negotiations Committee (HNC) has put together a delegation for the talks, but Moscow has criticised it as unrepresentative.
The Committee excludes Syria's main Kurdish party, the Democratic Union Party (PYD), as well as other opposition figures, and it has faced pressure to broaden its delegation, or participate alongside a second opposition delegation.
Lavrov warned that the talks would fail if the PYD was excluded, but Turkey has pushed back against the party's involvement.
- Checkpoint blasts kill 29 -
"We are categorically against the YPG and PYD sitting at the table," Prime Minister Ahmet Davutoglu said Tuesday.
Ankara considers the PYD and its military wing the People's Protection Units (YPG) to be offshoots of the outlawed Kurdistan Workers' Party, which has waged a bloody insurgency in the mainly Kurdish southeast of Turkey since 1984.
The wrangling over who will attend the latest round of talks has delayed the negotiations, which were originally scheduled to start Monday.
Instead, the UN's envoy on Syria Staffan de Mistura sent out invitations to the talks on Tuesday, his office said, with the talks to begin on Friday.
But he has refused to be drawn on who will be invited, and the HNC was meeting Tuesday in Riyadh to decide whether it will attend, after threatening to boycott if other opposition figures were invited.
The coalition has also said it cannot attend talks without action to end civilian deaths in government and Russian air strikes as well as regime sieges.
More than 260,000 people have been killed in Syria's war, and more than half the country's population displaced internally and abroad.
The conflict has become a complex multi-front battle, involving the regime, rebels, Kurds, and jihadists like the Islamic State group.
IS on Tuesday claimed responsibility for a double suicide bombing that killed at least 29 people in the regime-held central city of Homs, according to the Syrian Observatory for Human Rights monitoring group.
Syrian state television put the toll at 22 dead.
The twin blasts hit an army checkpoint in the Al-Zahraa neighbourhood, which has been targeted multiple times in the past in bomb blasts.
The district is home mostly to residents from the Alawite minority to which President Bashar al-Assad belongs.