Troops allied to the Syrian government have shelled a village in a rebel-controlled area near its capital Damascus, killing at least seven civilians, according to a monitoring group.

The Britain-based Syrian Observatory for Human Rights (SOHR) said shells hit al-Reem banquet hall in the village of Deir Qanun on Sunday.

The incident occurred in the Wadi Barada valley, which is the main source of water for Damascus.

The banquet hall has been housing hundreds of civilians who have escaped the intensified fighting for Wadi Barada that started on December 22, according to local activists.

The SOHR said besides the fatalities, at least 20 other people were wounded in the attack, some of them critically.

"This is the highest toll there since the beginning of the truce [on December 30]," said Rami Abdel Rahman, SOHR's head.

A difference source, the activist-operated Wadi Barada Media Centre, said 12 people were killed and more than 20 injured in Sunday's shelling.

The group posted pictures of the bloodied floors of the hall on social media, some of them showing bodies with severed limbs.

Medical teams have been unable to move around the valley because of the fighting and it is not clear if the dozens of injured are getting any immediate care, according to Fuad Abu Hattab, an exiled local resident and a Wadi Barada Media Centre activist.

The Syrian Civil Defence, a team of volunteer first-responders in rebel-held parts of Syria, also put the death toll at 12.

Heavy clashes between government troops and rebel forces have rocked Wadi Barada since Saturday, after the death of the government official who negotiated a deal to restore water to Damascus.

Ahmed al-Ghadban had been on his way to the main Ain al-Fijeh spring with government maintenance teams when he was killed.

Opposition fighters and government officials have traded blame over the killing of the retired army officer, who had assumed his duties on Saturday.

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Under the agreement, Ghadban was to oversee teams working to repair the infrastructure that supplies Damascus with water in exchange for a cessation of hostilities and the withdrawal of rebel fighters willing to do so.

About 5.5 million in Damascus and its suburbs have been without water since December 22.

Fighting has persisted in Wadi Barada since the December 30 ceasefire brokered by Russia and Turkey.

The ceasefire and planned talks are the latest efforts to negotiate an end to a conflict that has killed more than 400,000 people since it began with anti-government protests in March 2011.