Syrian government forces have liberated the last remaining Isis stronghold in the country as the group's self-proclaimed caliphate continues to crumble.

The Syrian military said it had driven extremist fighters from Deir Ezzor and regained full control of the eastern city on the west bank of the Euphrates following weeks of fighting, state media reported.

Isis had held most of the city since 2014, except for one large pocket where Syrian army troops and 93,000 civilians were trapped for three years.

Syrian forces and pro-government allies first broke the militant group's siege on the city in a Russian-backed offensive in September and have been advancing against Isis positions ever since.

The recapture of the city, the largest in eastern Syria, leaves Isis militants isolated and encircled in the region's countryside.

In a statement issued on Friday through state TV, army spokesman General Ali Mayhoub said the military had "completely" liberated the city and declared it had entered the "last phase" of its fight to annihilate Isis.

A Syrian soldier flashes a for 'V for victor'y sign in the eastern city of Deir Ezzor (AFP/Getty Images) (AFP)

Isis is estimated to have lost 90 per cent of its territory since 2014, including key urban strongholds Mosul in Iraq and Raqqa in northern Syria.

Deir Ezzor was strategically significant to the extremist group due to its location near the Iraqi border and its importance as the capital of the oil-rich province which shares its name.

The city's liberation all but reduces Isis's self-proclaimed caliphate to a pair of border towns on the Iraq-Syria frontier.

Iraqi forces and allied Shia militia are chasing remnants of the terror group inside the town of al-Qaim, on the Iraqi side of the border.

The Syrian army, backed by Russia and Iran, and Kurdish-led Syrian forces supported by the US, are racing to take the rest of the Deir Ezzor province, including the town of Albu Kamal near the Iraq border.

Footage posted on the website of the Syrian state news agency Sana showed the last moments of the fighting between the army and Isis in Deir Ezzor city. Plumes of smoke could be seen rising over the city's Isis-held neighbourhoods of Jamiayat and Jabiliyeh amid shelling by Syrian tanks.

Smoke billows from Deir Ezzor during fighting between Syrian government forces and Isis (AFP/Getty Images) (AFP)

"Army units, in co-operation with allied forces, liberated the city of Deir Ezzor completely from the Daesh terrorist organisation," said General Mayhoub, using the Arabic name for Isis. "With the loss of Deir Ezzor, Daesh loses its ability to lead terrorist operations by its militants who are now isolated and encircled east of the city."

Deir Ezzor's residents were reliant on UN air drops of food, medicine and other supplies during the siege. Some were pictured on Syrian media celebrating as the first of Isis's defences collapsed in September.

The breakthrough allowed the army to dismantle mines around a besieged airbase, allowing troops and advancing forces to reunite.

Forces in Syria and Iraq, backed by regional states and global powers, now appear on the cusp of victory over Isis, which proclaimed its authority over all Muslims in 2014 when it held about a third of both countries and ruled over millions.

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A US-led international coalition which has been bombing Isis and supporting ground allies on both sides of the frontier said the militant group now has a few thousand fighters left, mainly holed up in al-Qaim and Albu Kamal.

"We do expect them now to try to flee, but we are cognisant of that and will do all we can to annihilate Isis leaders," said spokesman US Colonel Ryan Dillon.

He estimated there were 1,500 to 2,500 fighters left in al-Qaim and 2,000 to 3,000 in Albu Kamal.

But both the Iraqi and Syrian governments and their international backers have warned fighters will still be able to mount guerrilla attacks once they have no territory to defend.

Colonel Dillon said: "As Isis continues to be hunted into these smallest areas ... We see them fleeing into the desert and hiding there in an attempt to devolve back into an insurgent terrorist group.