By Ellen Francis and Laila Bassam

BEIRUT (Reuters) - With a sudden lunge through jihadist lines, the Syrian army and its allies on Monday came to within 3 km of relieving the Euphrates city of Deir al-Zor, where Islamic State has besieged 93,000 civilians and an army garrison for years.

The advance on the eastern city marks another stinging setback for the once-triumphant Islamic State, fast retreating in both Iraq and Syria as its self-declared caliphate crumbles.

Syrian troops were rapidly approaching the city, reaching a point 3 km (2 miles) away, state television said. Dozens of trucks loaded with food stood ready to enter the enclave in the city once government forces break the siege, it said.

(For a graphic on battle for control in Syria click http://tmsnrt.rs/2wyo0lw)

A military media unit run by Hezbollah, a key ally of Damascus, said the advancing forces were heading to the garrison's camp on the city outskirts.

Deir al-Zor's provincial governor told Reuters he expected the army could reach the city within hours.

"Islamic State is in confusion. There is no leadership or centralized control," said a commander in the military alliance supporting Syrian President Bashar al-Assad.

Hemmed in on all sides, Islamic State, which ruled over millions of people in both Iraq and Syria at its peak in 2014, is falling back on a last Euphrates stronghold downstream of Deir al-Zor city in the towns of al-Mayadin and al-Bukamal, near the border with Iraq.

But as it has lost its core territory - defeated in Iraq's Mosul now yielding street after street in Syria's Raqqa - the ultra-hardline group has still been able to launch attacks in the West and maintain a threat in other centers such as Libya.

The fighters have been driven out of nearly all of their territory in Iraq over the past two years by government forces backed by a U.S.-led coalition. In Syria, they are fighting against both Assad's Russian-backed government and a U.S.-backed Arab and Kurdish militia that has launched an assault on Raqqa.

In the IS-encircled pocket in Deir al-Zor, news of the army's approach prompted people to take to the streets to celebrate, governor Mohammed Ibrahim Samra said by phone.

The city has been cut off since 2013, after rebel groups rose up against Assad during the first flush of Syria's six-year war. Islamic State then overran rebel positions and encircled the army's enclave in the city in 2014.

It was a major prize. Deir al-Zor is the center of Syria's oil industry, a source of wealth to the group and a serious loss to Damascus. As the army has pushed east in recent months, oil and gas fields have once more fallen to the government.

Islamic State fighters stepped up efforts this year to seize the enclave before the army could arrive. In January, they severed it from the city's military airbase and took over a nearby hill, further straining its links to the outside.

During the long siege, high-altitude air drops have supplied the city. The United Nations said in August it estimated there were 93,000 civilians in the government's Deir al-Zor pocket, where conditions were "extremely difficult".

"Despite all this and despite the shelling and injured, things are running in the city," governor Samra had said on Sunday. "The institutions are running, the bakeries. Water is also pumped twice a week to our residents, aid is distributed daily."

RAPID ADVANCE

For Assad, the weekend's lightning advance caps months of steady progress after government forces turned from their victory over rebels in the northern commercial capital Aleppo last December to push eastwards against Islamic State.

"The army has been advancing in a rapid and calculated way from all directions," a Syrian military source said, referring to the months-long campaign across the desert.

With Russian jets and an alliance of Shi'ite militias backed by Iran, including Lebanon's Hezbollah, the army has captured swathes of the central and eastern deserts in parallel offensives from Palmyra and al-Resafa.

Those offensives have accelerated since linking up last month, taking swathes of land from Islamic State except for a small zone near the town of al-Salamiya. The militants still control much of Deir al-Zor province, including half the city.

Heavy Russian air cover has helped the Syrian military and allied forces march toward the city, Russia's defense ministry said in a statement on Monday.

A resident of the city reached by telephone, who gave his name only as Mohammad, said he could hear the sound of warplanes in the distance. The army advances over the last two days had sparked "indescribable joy" among people in the enclave after years of siege, he said.

Under attack, Islamic State has pulled reinforcements from al-Mayadin and relied on its usual tactics of booby traps, mines and sudden raids, the commander in the pro-Assad alliance said.

The latest advance came after intense preparatory artillery, a multi-pronged assault and gains in high ground commanding nearby areas, the non-Syrian commander said.

Meanwhile, as the army and its allies have forced other militant pockets to surrender, including an Islamic State enclave on Syria's border with Lebanon a week ago, they have been able to transfer more troops to the desert campaign.

"It helped a lot to switch the military effort of the Syrian army and the resistance to the eastern Syrian desert," the commander said, adding that thousands of troops had arrived from the battle on the Lebanon border.

Islamic State fighters and their families evacuated from that enclave as part of a surrender deal were escorted by the Syrian army and Hezbollah to east Syria, but have been stopped by a U.S.-led coalition from reaching Deir al-Zor.

Ten of the original 17 buses are now stuck in no-man's land between pro-government forces and Islamic State territory and six buses retreated back into government areas, the commander added.

(Additional reporting by Kinda Makieh in Damascus and Andrew Osborn in Moscow; Writing by Angus McDowall,; Editing by Mark Trevelyan, Ed Osmond and Peter Graff)