Heavy clashes erupted Tuesday between Syrian regime forces and Islamic State group jihadists cornered in a pocket of southern Daraa province, state media and a monitor said.
President Bashar al-Assad's regime, backed by its Russian ally, has been fighting since mid-June to retake rebel-held areas in Daraa and neighbouring Quneitra province.
In Quneitra, forces loyal to Syrian President Bashar al-Assad now control all areas adjacent to the Israeli-occupied Golan Heights, the Syrian Observatory for Human Rights said.
But in the southwest of Daraa, nearly 100 jihadists from the IS-allied Army of Khaled Ben al-Walid are surrounded in their last redoubt, the Observatory said, with the regime and its Russia targeting it with air raids.
"Army units are carrying out fierce fighting in the last pockets of the IS terrorist group" in a village in the area, Syrian state television reported.
Tuesday afternoon's violence came after the apparent collapse of talks the Observatory had said were taking place between the regime and IS.
IS was using the release of about 30 Druze women and children it kidnapped last week as a bargaining chip, demanding its fighters be allowed to evacuate to their stronghold in the Badiya, the Observatory said.
The Badiya refers to the vast desert stretching from central Syria to the eastern border with Iraq, and where IS still holds territory.
IS abducted the civilians from a remote village in Sweida, a province directly east of Daraa, during a deadly rampage on July 25 that left more than 250 people dead in the minority-populated area.
IS claimed responsibility for the killings but has made no mention of the kidnappings on its propaganda channels.
However, a video published by local news outlets appeared to show one of the female hostages demanding Syria's government halt its assault on the IS-held part of Daraa.
After recapturing the vast majority of Daraa and neighbouring Quneitra from mainstream rebels, Syrian troops turned to IS areas of control in the two provinces.
In around two weeks, they have whittled down IS territory to the "surrounded" zone along the border with Jordan, both the Britain-based Observatory and Syrian state media say.
Syrian state news agency SANA said Monday it expected the group would collapse "within days" but made no mention of negotiations.
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The evacuation deal would not be the first between IS and Syrian government representatives.
In May, jihadists were bussed out of the Yarmuk camp, their last area of control in Damascus, paving the way for the government's full recapture of the capital.
IS fighters from Yarmuk were transferred to the Badiya, and several local outlets alleged those relocated jihadists carried out the Sweida attacks.
The suicide blasts, shootings, and stabbings were the deadliest ever for Sweida, which is mostly regime-held and had been relatively insulated from Syria's seven-year war.
Government forces have managed to retake nearly all of Daraa and Quneitra through a combination of deadly bombardments and surrender deals imposed on the rebels.
The agreements provide for the handover of heavy weapons and the return of state institutions, with fighters who oppose a regime takeover bused to other rebel-held areas.
One such deal took place Tuesday in Jubata al-Khashab near the Israeli-occupied section of the Golan, according to Syria's official SANA news agency.
With the takeover of that village, the regime now controls all territory along the demarcation line, Observatory head Rami Abdel Rahman told AFP.
A handout picture by the official Syrian Arab News Agency (SANA) shows Syrians carrying a coffin on July 26, 2018, after the Islamic State group attack on Sweida