AMMAN (Reuters) - A U.S.-backed Syrian Arab rebel force vowed on Thursday to continue attacks against Islamic State militants after being forced to retreat from the outskirts of a town near the Iraqi border when the jihadists counter-attacked.

The New Syria Army had launched an operation backed by U.S. bombers on Tuesday aimed at capturing the town of Al-Bukamal from Islamic State and cutting supply and communications lines for the group between Syria and Iraq.

They were forced to retreat to their base in al-Tanf in southern Syria on Wednesday after their troops were ambushed.

“Our forces successfully departed at the conclusion of the raid. We will continue to conduct operations to remove Daesh,” the New Syria Army said in a statement, using an Arabic acronym for Islamic State.

Western intelligence sources said Tuesday’s operation at the southern tip of oil-rich Deir al-Zor province was largely a show of force by the group, which is almost entirely equipped and financed by the Pentagon.

Dozens of U.S. special operations forces are now in Syria working closely with a collection of Syrian Arab rebel groups, U.S. officials have said in recent months.

Sources within the New Syria Army said the operation had not been intended to win control of the heavily fortified militant stronghold where over 50,000 civilians live, but rather deal a psychological blow and test the group’s own capabilities.

“The goal was not to take over the town of Al Bukamal but to engage Daesh in the deserts ... and strike a blow against them near the city,” Muzahem al Saloum, a spokesman for the group, told Reuters.

Islamic State’s capture in 2014 of Al -Bukamal effectively erased the border between Syria and Iraq and losing the town would have been a huge symbolic and strategic blow to the cross-border “caliphate” led by Abu Bakr al-Baghdadi.

The military operation began from al-Tanf, a border post in southern Syria seized from Islamic State militants and now a base where troops undergo training by U.S. special operations forces, Western security sources and diplomats said.

The U.S.-led campaign against Islamic State has moved up a gear this month, with an alliance of militias including the Kurdish YPG launching a major offensive against the militant group in the city of Manbij in northern Syria.

Amaq news agency, which is affiliated with Islamic State, said it had beheaded “spies” working for the New Syria Army. It had previously reported that 40 rebel fighters were killed and 15 captured in Wednesday’s counter-attack.