Regime forces were on Thursday tightening the noose on rebels holed up in a key area of the central city of Homs, the Syrian Observatory for Human rights watchdog said.
"The Syrian army, supported by back-up forces and expert officers from Iran and Hezbollah, has taken control of large parts of the Wadi al-Sayeh district" in the centre of Homs, the group said in a statement.
The neighbourhood is half way between the Khaldiyeh district and the Old City, two rebel-held areas that have been under siege by the army for nearly a year.
"Taking Wadi al-Sayeh would enable the army to isolate those two districts" by severing links between them, said the Britain-based Observatory which relies on a network of activists and medical staff on the ground for its information.
"In the Old City 800 families have been under siege for nearly a year, and hundreds have been wounded. If (Sunni-majority) Old Homs is taken, sectarian revenge attacks could take place" by pro-regime forces, it said.
Homs, the third largest city in the country, has been dubbed by the opposition Syrian National Council as the "beating heart of the revolution".
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It was one of the first cities to join the revolt against President Bashar al-Assad's regime that began two years ago with peaceful protests but morphed into a bloody insurgency after a fierce crackdown on dissent.
Homs is divided along sectarian lines into Sunni, Alawite, Christian and ostensibly mixed quarters.
The regime is led by Alawites, an offshoot of Shiite Islam, while Syria's population is majority Sunni, as are the rebels.
In the Observatory statement, its chief Rami Abdel Rahman said officers from Iran and from Lebanon's Shiite Hezbollah militia were directing the army's operations in Homs.
Hezbollah has already said that members of the group have been fighting in the Qusayr region in Homs province.
On April 17, Assad said his regime's defeat is not an option.
"There is no option but victory. Otherwise it will be the end of Syria, and I don't think that the Syrian people will accept such an option,"