The army and its allies were locked in fierce battles with al-Nusra Front and ISIS militants north of Aleppo on Sunday in a bid to cut the last route out of the city.
Fresh clashes broke out overnight in Mallah, a section of farmland on the northern edge of the divided city of Aleppo.
Syrian forces have been attempting to seize Mallah for more than two years as it runs adjacent to the Castello Road, the last route militants can use to access districts they control in the city.
Syrian daily Al-Watan, which is close to the government, quoted a field commander as saying that the army has fully overrun Mallah but has not yet cut off the Castello Road.
"The army has two kilometers (less than two miles) left to cut the militants' only lifeline from the eastern neighborhoods to the outside world via the Castello Road," the paper wrote.
London-based Syrian Observatory for Human Rights confirmed the report.
Observatory head Rami Abdel Rahman said government forces “were able to advance in the area, but the Castello Road is still open."
"The army has fully overrun Mallah but has not yet cut off the Castello Road"
"If they seize control of all of Mallah, they will be able to besiege the opposition neighbourhoods of Aleppo city," he added.
Fighting has rocked Mallah since a government assault on the area began in late June, followed by a militant-led counterattack.
Dozens of militants on both sides of the frontline, including from the al-Nusra Front, the Syrian branch of Al-Qaeda, have been killed there over the past week, the observatory said.
Aleppo province is criss-crossed with supply routes for nearly all of Syria's warring parties.
The city itself, known as the country's pre-war commercial capital, has been divided since mid-2012 into militant-held and government-held areas, Press TV reported.
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