Beirut (AFP) - A US-backed alliance on Wednesday captured Syria's Tabqa and its nearby dam from the Islamic State group, a day after Washington said it would arm the force's Kurdish fighters.

Turkey slammed the US decision to arm the Kurdish People's Protection Units (YPG), which Ankara considers terrorists but which Washington sees as an indispensable ally in the fight against IS.

The issue risks stoking tensions between the two countries less than week before US President Donald Trump and his Turkish counterpart Recep Tayyip Erdogan meet for the first time as heads of state.

The YPG makes up the bulk of the Syrian Democratic Forces, which on Wednesday scored a major victory against IS in the Syrian city of Tabqa.

The SDF said it had "completely liberated" Tabqa and the adjacent dam after weeks of fierce fighting.

"The combing operations are ongoing to ensure that the city is clear," said spokesman Talal Sello.

Tabqa sits on the Euphrates River as well as a strategic supply route about 55 kilometres (35 miles) west of Raqa, the Syrian heart of IS's so-called caliphate.

The UN has warned damage to the Tabqa dam -- Syria's largest -- could lead to massive flooding, and a source who works with the dam's technicians said they had fled the structure as fighting drew near in recent days.

"Tomorrow (Thursday), the teams will assess the dam and the level of damage caused by the clashes," the source told AFP.

- 'Immediately' reverse decision -

Warplanes from the US-led coalition have pounded Tabqa and nearby IS positions for weeks as part of the SDF's flagship offensive for Raqa.

The YPG said the US's "historic" decision to begin providing it with weapons and other equipment would speed up its assault on IS positions.

Spokesman Redur Xelil said the move was "somewhat late", but would still "provide a strong impetus" to forces fighting IS.

But this sparked ire from Turkey, which regards the YPG as the Syrian branch of the Kurdistan Workers' Party (PKK), which since 1984 has waged an insurgency inside Turkey, leaving tens of thousands dead.

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"I hope very much that this mistake will be reversed immediately," said Erdogan.

"I will personally express our worries in a detailed way when we talk with President Trump on May 16," he added, saying NATO's Brussels summit on May 25 would also tackle the issue.

In a surprise announcement, the Pentagon said Trump had authorised the arming of the SDF's Kurds "to ensure a clear victory over ISIS in Raqa".

Until Tuesday, official US policy was to supply weapons only to the Arab components of the SDF -- never to its Kurds.

A first consignment of weapons is already in place for delivery and could be dispatched to the Kurds "very quickly," said US Colonel John Dorrian, a military spokesman for the US-led coalition.

The dispute over arming Syria's Kurds poisoned ties between the two NATO allies under the administration of former president Barack Obama but Ankara had hoped for smoother ties under Trump.

Prime Minister Binali Yildirim said it was "out of the question" for Turkey to accept any direct or indirect help for the PKK.

"The United States and Turkey are two major partners in NATO. We don't believe America would choose a terror group over our strategic relations," he said.

- 'Only different names' -

Pentagon chief Jim Mattis sought to allay Turkish concerns, saying the US would "work out any concerns" with Turkey over security on its Syrian border.

It remains to be seen what shadow the issue will cast over upcoming talks between Trump and Erdogan, touted as chance to forge a new partnership between the two sides.

While the government expressed predictable anger, the deputy head of the opposition Republican People's Party (CHP) Ozturk Yilmaz said it should go even further by postponing Erdogan's visit to the US.

A high-level Turkish delegation including Chief of Staff General Hulusi Akar, presidential spokesman Ibrahim Kalin and spy chief Hakan Fidan had been in the US laying the groundwork for the meeting.

According to the New York Times, the delegation was informed of the decision to arm the YPG by Trump's national security adviser H.R. McMaster.

Turkish media said the three met McMaster at the White House on Monday but gave no details over the content of the talks.

Both Washington and Brussels classify the PKK as a terror group but do not regard the YPG as such.

But Turkish Foreign Minister Mevlut Cavusoglu said the two were one and the same.

"YPG and PKK are both terror groups, there is no difference at all between them. They only have different names," he said.

Turkey has said it is keen to join the battle for Raqa on condition the offensive excludes the YPG, which Ankara has targeted with air strikes and artillery.

Last month, Erdogan said if Turkey and the US joined forces, they could turn Raqa into a "graveyard" for jihadists.

Meanwhile, Trump received Russian Foreign Minister Sergei Lavrov at the White House on Wednesday and called on Moscow to reign in its ally Syrian President Bashar al-Assad.