Hundreds of foreigners affiliated with Islamic State, mostly women and children, fled a displacement camp in north-east Syria as a nearby Kurdish-held town came under attack by Turkish forces.

Key points: Kurdish officials said more than 700 Islamic State relatives escaped the Ain Issa camp

Kurdish officials said more than 700 Islamic State relatives escaped the Ain Issa camp A Kurdish politician was pulled from her car and executed, one of the 38 civilians and 80 Kurdish fighters that have died

A Kurdish politician was pulled from her car and executed, one of the 38 civilians and 80 Kurdish fighters that have died US forces pulled back as the Kurds announced a new alliance with Syrian government forces

The escapes heightened fears that the Turkish assault against Kurdish forces, now in its fifth day, could allow Islamic State (IS) to regain strength in the ravaged region.

As Turkish forces pressed their offensive, the Kurds said Syrian government forces had agreed to help them fend off Turkey's invasion — a major shift in alliances that came after President Donald Trump ordered all US troops withdrawn from the northern border area amid the rapidly deepening chaos.

The shift could lead to clashes between Turkey and Syria and raises the spectre of a resurgent Islamic State group as the US relinquishes any remaining influence in northern Syria to President Bashar al-Assad and his chief backer, Russia.

Camp breakout came amid fighting around key towns

Despite fierce international opposition and threats of possible sanctions, Turkish forces targeted areas around two Syrian border towns — Ras al Ain and Tel Abyad — with fresh shelling on Sunday.

Turkey's military said it had seized both towns, but the Kurdish-led Syrian Democratic Forces denied they had fallen.

Taking control of Ras al Ain and Tal Abyad is a key goal in the Turkish offensive.

Turkey's military says it has captured the key Syrian border town Ras al Ain — one of the Turkish offensive's key goals. ( AP: Uncredited )

Kurdish officials said more than 700 "Daesh [Islamic State] elements" had escaped from a secure annex in a camp in Ain Issa after Turkish artillery bombardments struck close to the area.

They panicked, attacking guards and then storming the gates, officials said.

It was not immediately possible to confirm the exact number of escapees.

Citing sources in the camp, the director of the UK-based Syrian Observatory for Human Rights, Rami Abdulrahman, said there was a state of "anarchy" inside, adding that warplanes struck villages near the camp on Sunday.

Humanitarian organisation Save the Children said it was deeply concerned by reports of the escapes and warned of "a danger that children of foreign nationals could now be lost in the chaos".

It reported no foreign women were left at the camp and that masked men on motorbikes were circling around it.

Located some 35 kilometres south of the border, the Ain Issa camp is home to around 12,000 people, including 1,000 wives and widows of Islamic State fighters and their children.

Syrian army 'to deploy along Turkish border'

The United Nations says at least 130,000 people have been displaced by the fighting. ( AP: Lefteris Pitarakis )

On Sunday night Syrian state media and the Kurdish Syrian Democratic Forces (SDF) confirmed that a deal had been reached to deploy Syria's army along the entire length of the border with Turkey.

In a statement, the SDF said the army deployment would support them in countering "this aggression and liberating the areas that the Turkish army and mercenaries had entered", in reference to Turkey-backed Syrian rebels.

"In order to prevent and block this assault, agreement has been reached with the Syrian government — whose duty is protect the borders of the country and to protect Syrian sovereignty," the statement said.

It would also allow for the liberation of other Syrian cities occupied by the Turkish army such as Afrin, the statement said. Turkish-backed Syrian militias seized control of the Kurdish city of Afrin and the surrounding area along the Turkish border in north-west Syria in 2016.

Turkey plan to set up a 'safe zone' cleared of Kurdish forces inside Syria along the two countries shared borders. ( ABC News: Graphic by Jarrod Fankhauser )

Syrian state media said government troops were moving to the city of Manbij — which is the largest town situated on the edge of the Turkish controlled area of Syria — after Kurdish forces agreed to withdraw.

The deal, which was negotiated with Russian participation, could see the Russian-backed government in Damascus seize control of large parts of north-eastern Syria.

After losing control of more than half of the country following an uprising that began in 2011, the Syrian government had won back most of its territory in recent years.

Regaining control in the north-east would leave only militant-controlled Idlib out of government hands.

Turkish-backed forces accused of killing civilians, including journalist murdered at roadblock

Turkish-backed Syrian fighters enter the Syrian border town of Ras al-Ayn. ( AP )

At least 38 civilians and more than 80 Kurdish fighters have been killed in the Turkish offensive so far, according to the Syrian Observatory for Human Rights.

The human rights monitor said pro-Turkey forces had killed nine civilians, including a female politician, who were pulled from their cars and shot dead on a highway south of Tel Abyad on Saturday.

Hevrin Khalaf, the 35-year-old secretary general of the Future Syria Party was "taken out of her car during a Turkish-backed attack and executed by Turkish-backed mercenary factions", the political arm of the Kurdish-led Syrian Democratic Forces (SDF) said in a statement.

"This is a clear evidence that the Turkish state is continuing its criminal policy towards unarmed civilians," it added.

Relatives mourn during a funeral of a Syrian Democratic Forces fighter in the Syrian town of Qamishli ( AP: Baderkhan Ahmad )

Mutlu Civiroglu, a specialist in Kurdish politics, described her death as a "great loss".

"She had a talent for diplomacy, she used to always take part in meetings with the Americans, the French, the foreign delegations."

A US State Department spokesperson said the killings, which were captured on camera phones, were "extremely troubling".

Meanwhile, Turkish reports said 17 civilians had been killed in southern Turkey, including a Syrian baby.

Nearly 50 fighters with the pro-Turkish rebels, known as the Syrian National Army, and one Turkish soldier had been killed.

The UN said a pumping station in the town of Hassakeh was damaged by shelling, affecting the water supply for 400,000 people, including 82,000 residents of camps for displaced people.

Trump orders all US troops to withdraw farther south

The Kurdish-led Syrian Democratic Forces were a key US ally in the war against the Islamic State group and drove the extremists from most of the territory they once held in north-eastern Syria.

The force swept up thousands of Islamic State fighters and their family members in the campaign, and had warned it might not be able to maintain its various detention centres as it struggled to repel the Turkish advance.

Hundreds of residents of the Ain Eissa camp fled after clashes broke out between Turkish-backed Syrian fighters and Kurdish forces. ( Reuters: Khalil Ashawi )

NATO member Turkey views the Kurdish fighters as terrorists because of their links to the insurgency in its southeast and has vowed to carve out a "safe zone" along the border.

It launched the operation earlier this week after US President Donald Trump moved US forces aside, saying he was committed to getting out of America's "endless" wars.

On Sunday, Mr Trump ordered all US troops to withdraw farther south to avoid getting caught in the fighting.

A US military official said the situation across north-eastern Syria was "deteriorating rapidly" and that US forces could no longer control ground communications with the Syrian Kurdish fighters they had previously partnered with.

People watch from Akcakale in south-eastern Turkey as smoke billows from fires on targets in Tel Abyad. ( AP: Lefteris Pitarakis )

The official, who was not authorised to disclose operational details and spoke on condition of anonymity, said US troops on the ground were at risk of being "isolated" and could clash with Turkish-backed Syrian forces.

Defence Secretary Mark Esper told CBS that the approximately 1,000 US troops in Syria were not leaving the country entirely but were trying to avoid becoming embroiled in the conflict.

"In the last 24 hours, we learned that they [the Turks] likely intend to expand their attack further south than originally planned — and to the west," he added.

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The danger to American forces was shown on Friday, when a small number of US troops came under Turkish artillery fire at an observation post in the north.

No Americans were hurt, but Mr Esper called that an example of "indiscriminate fire" coming close to Americans, adding it was unclear whether that was an accident.

Mr Trump's decision to effectively abandon America's Kurdish allies has drawn heavy criticism, even from some members of his own party.

"A catastrophic mistake," House Republican Conference chair Liz Cheney said, while senator Lindsey Graham called it a "shot in the arm to the bad guys".

Mr Trump later wrote in a Tweet he would "destroy" Turkey's economy if they did anything he considered to be "off limits", but on Sunday took to Twitter again to boast.

"Very smart not to be involved in the intense fighting along the Turkish Border, for a change. Those that mistakenly got us into the Middle East Wars are still pushing to fight. They have no idea what a bad decision they have made. Why are they not asking for a Declaration of War?"

The United Nations says more than 130,000 Syrians have fled since the operation began five days ago, including many who had taken refuge from previous rounds of fighting in the country's eight-year civil war.

ABC/wires