By Suleiman Al-Khalidi

AMMAN (Reuters) - Fighters from Al Qaeda's Nusra Front and other insurgents attacked and briefly entered Baath City in southern Syria on Thursday, the army's last major bastion in a province flanking the Israeli-occupied Golan Heights.

The battle is part of a campaign launched by the insurgents this week to take control of the entire Quneitra province. Only Baath City and neighboring Khan Arnaba town remain under President Bashar al-Assad's forces.

"If they fall the rebels will have secured the second province after Raqqa," said Abu Said Jolani, an activist in the area.

Raqqa, in northern Syria, is held by the militant group Islamic State and has been targeted by U.S.-led air strikes.

The insurgents were locked in street fighting with government troops in the city centre overnight and were pushed back to the outskirts on Thursday, activists said. Thousands of Baath City's 30,000 residents have already fled.

The city was named after Syria's ruling Baath Party as an act of defiance after the destruction of nearby Quneitra city in the 1967 war with Israel. Quneitra was abandoned and Baath is now the provincial administrative centre.

About 2,000 fighters were taking part in the southern offensive. Their advances, which expand insurgent control close to the Golan Heights and Jordan, are also important because Assad's power base in Damascus lies just 40 miles (65 km) to the north. The fighters want to open a path towards the capital and link up with insurgents there.

Before entering Baath City, the insurgents said they had captured several villages on the outskirts and claimed control of most of the countryside.

"The rebels are using all kinds of weapons from tank fire to mortars, as well as raiding groups," said Abdullah Saif Allah, a Nusra Front field commander in Hamidiya town near the frontier with Israel.

Syrian state media and pro-government newspapers have said the army, backed by loyalist militias, had repelled the rebel push in Baath City. They reported heavy fighting after a barrage of rebel mortar and artillery fire hit the city centre and municipality building.

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Hundreds of Nusra fighters who fled from the eastern Deir al-Zor province after being driven out by Islamic State earlier this year have regrouped in southern Syria, boosting the rebel presence there, activists say.

"It gave the fighters in the area the upper hand," said Abu Yahya al-Anari, a fighter from Ahrar al-Sham.

The army depends on aerial bombardments in the area. On the ground, it has been exposed since moving thousands of troops from bases to reinforce Aleppo in the north, rebels say.

Insurgent gains since earlier this year have been mainly achieved by Nusra Front together with other Islamist brigades and rebels fighting under the umbrella of the Western-backed Free Syrian Army. Unlike rebel in-fighting further north, they have coordinated well so far.

Most of heavy weaponry and fighters in Quneitra province are drawn from hardline Islamist brigades such as Ahrar al-Sham and al Muthana alongside Nusra, activists and analysts say.

They have eroded the dominance of the Western-backed rebels that control areas further southeast towards Deraa city and along the Jordanian border.

(Editing by Sylvia Westall and Angus MacSwan)