Amman: Syrian rebel forces on Thursday took over a town near the Turkish border that had been the main stronghold of Islamic State in the northern Aleppo countryside, the Syrian Observatory for Human Rights and rebel sources said.

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The monitor said factions fighting under the banner of the Free Syrian Army (FSA), some supplied with arms by Turkey and other foreign backers, captured the town of al-Rai after fierce battles with the militants.

"This is the beginning of the end of Daesh (Islamic State), those who have bet the FSA have been decimated are now proven wrong. It`s a victory for the Free Syrian Army," said Abu Abdullah from the Nour al Din al Zinki brigade that participated in the assault on the heavily defended border town.

"We will continue our path to al Raqqa and all the towns occupied by Daesh," he said referring to Islamic State`s acronym in Arabic and its defacto capital.

The rebels said their next step was advancing towards the Islamic State-held city of al Bab, south of al Rai and northeast of Aleppo.

The recent gains by the mainly non-jihadist rebels is a boost to Turkey, which has sought to prevent Syrian Kurdish-led forces from expanding their stretch of territory along the border.

It was the first retreat by the Islamic State militants since they made major advances in that area last May against rival insurgents and captured areas close to the Azaz border crossing with Turkey.

Amaq news agency, which is linked to the militants, conceded that forces it described as "U.S.- and Turkish-backed opposition brigades" had taken the town after days of intense "U.S. bombing and Turkish artillery" fire.

The news agency said al-Rai fell after heavy clashes and two suicide bombings that led to many casualties among Islamic State opponents.

The Sunni militants have used suicide bombings to hold back offensives by the Syrian army and their allies by deploying small groups of fighters to disrupt supply lines. That is a change of tactics from ambushes and lightning attacks after the loss of significant territory, defence experts say.

A sustained rebel advance by mainstream rebel groups near the Turkish border this week that allowed the moderate non-jihadist rebels to capture a string of villages eroded Islamic State`s last foothold in an area identified by the United States as a priority in the fight against the group.

Rebels who previously struggled to make gains against Islamic State in the area and had been fending off advances in recent weeks by Kurdish-led fighters mobilised several thousand fighters for the attack, rebel sources said.

An alliance of FSA rebel groups formed for the offensive includes the Turkish-backed Sultan Murad and Failaq al Sham groups.

Islamic State`s foothold at the Turkish border was also significantly loosened last year by U.S.-allied Kurdish fighters of the YPG, which gained territory from the group farther east.