DAMASCUS - The Islamic State group battled Syrian rebel forces in a Damascus neighbourhood on Monday, bringing the jihadists closer than ever to the centre of the capital, a monitoring group said.

IS militants fought street battles against Islamist rebels in Asali, part of the capitals southern Qadam district, after seizing two streets there over the weekend, the Syrian Observatory for Human Rights said.

"This is the closest IS has ever been to the heart of Damascus," Observatory head Rami Abdel Rahman said.

He said the jihadists had advanced from the adjacent Al-Hajar Al-Aswad neighbourhood, where they have been based since July 2014.

A Syrian military official confirmed the clashes and said he was "very happy that they are fighting."

"But we are ready to react if they try to advance into government-held territory," the official said.

According to the Observatory, opposition-held Qadam has been relatively quiet since a truce between rebel groups and regime forces there a year ago.

It said fighting in the district on Sunday left 15 fighters dead, but it could not specify how many were from IS and how many were Islamist rebels.

Abdel Rahman said the "fierce street battles" had forced civilians to flee the area.

Since its expulsion from the Eastern Ghouta suburb of Damascus last year, IS has used Al-Hajar Al-Aswad as a base for attacks on the capital.

From there, it tried to seize the Yarmuk Palestinian refugee camp in April, but was pushed back.

That same month, IS kidnapped two opposition fighters from Qadam and beheaded them in Al-Hajar Al-Aswad.

More than 240,000 people have been killed in Syrias conflict, which began with popular anti-government protests in March 2011 but has evolved into a complex civil war.