AMMAN (Reuters) - U.S. backed Syrian forces repelled a major counter-attack by Islamic State militants holding out at the country’s largest dam and in the nearby town of Tabqa, the group and activists said on Sunday.

FILE PHOTO: A view shows part of the northern part of the Tabqa Dam on the Euphrates River, Syria March 28, 2017. REUTERS/Rodi Said/File Photo

The dam is a key strategic target in the military campaign to isolate and capture the Syrian city of Raqqa, 40 km (25 miles) to the east and Islamic State’s biggest urban stronghold.

The U.S.-backed group said militants attacked their positions north-east of Tabqa and at an airbase to the south of the town where dozens of their fighters were killed; but the coalition of Kurdish and Arab militias was making slower advances in a village east of the town.

Jehan Sheikh Ahmad, a spokeswoman for the Syrian Democratic Forces (SDF), spearheaded by the powerful Kurdish YPG militia, said the militants were stepping up their resistance as SDF forces got closer to encircling the town and the dam.

“Our forces are advancing...(Islamic State )are facing large difficulties and so they are starting counter-attacks,” said the official whose forces have U.S. special forces with them.

The SDF began an assault to capture the dam and the nearby town almost two weeks ago after the coalition landed some of its fighters on the southern side of the Euphrates near Tabqa, leading to its capture of an air base.

The SDF has been waging a multi-phased offensive since November to isolate Raqqa, with backing from the U.S.-led coalition taking territory to the north and east of the province.

FEAR OF COLLAPSE

Hundreds of families with their cattle, property, motor bikes and vans continued on Sunday to flee from villages under Islamic State control.

The U.S.-backed forces say at least 7,000 people have taken shelter in their areas since the campaign to capture Tabqa.

Many are also fleeing air strikes on civilian areas in Raqqa province that have left dozens dead according to activists and the British-based Syrian Observatory for Human Rights.

Last month strikes believed to be conducted by the U.S.-led coalition hit a bakery and a local market in Tabqa town with dozens of civilians killed. Another raid that hit a school sheltering displaced people near Raqqa also killed scores.

SDF denies civilians are targeted.

Islamic State and the Syrian government have both said the hydroelectric dam is vulnerable to collapse after strikes by the U.S. led coalition

Syrian officials say that would lead to catastrophic flooding in the cities and towns in the Euphrates valley downstream.

The SDF and the coalition have denied the dam is in danger.

Residents, however, say an SDF attempt last week to relieve the dam’s water levels by opening a canal from the Balikh River that flows into the Euphrates had flooded cultivated agricultural land in several villages.