Tabqa (Syria): US-backed fighters hunted for jihadist holdouts in Syria's Tabqa on Thursday after overrunning the city and nearby dam in a step forward for their advance on Islamic State group stronghold Raqa.


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The Syrian Democratic Forces scored one of their biggest victories against IS jihadists as controversy intensified over a US decision to arm the alliance's Kurdish component.


The SDF was conducting clearance operations after seizing Tabqa and the nearby dam yesterday, said the Syrian Observatory for Human Rights.


"The SDF were able to deploy onto the dam itself during the night," the Observatory's Rami Abdel Rahman said. "But civilians are still unable to enter some parts of Tabqa because of explosives" left by IS.


The US military command in the Middle East, Centcom, confirmed the "liberation" of Tabqa.


"The SDF's increased pressure on ISIS from each flank allowed it to... Clear the final neighbourhoods of the city and isolate Tabqa dam," said Centcom, referring to IS.


The Arab-Kurdish alliance accepted IS's surrender to protect civilians and the dam, it said, adding "the coalition tracked fleeing fighters and targeted those that could be safely hit".


Situated on the Euphrates River about 55 kilometres upstream from Raqa, Tabqa is a key waypost in the operation to capture the jihadists' de facto Syrian capital.


Operation Wrath of the Euphrates has seen the SDF capture large swathes of territory north of Raqa and at their closest point its fighters are just eight kilometres (five miles) from the city.


It is now working to tighten the noose before a final assault.


The battle for Tabqa was marked by fears that fighting could damage the nearby dam -- Syria's largest -- with the potential for catastrophic flooding.


Technicians fled the dam as fighting intensified in recent days, a source who works closely with them told AFP.


A repair team was on standby today, awaiting permission from the SDF, which was still clearing mines, to enter and assess any damage to the structure.


An AFP correspondent saw SDF fighters distributing sweets to their comrades as they celebrated at the dam overlooking Lake Assad, a large reservoir created by the facility in the 1970s.


The SDF is dominated by the Kurdish People's Protection Units (YPG), seen by the US as an indispensable ally in the fight against IS but considered a "terrorist group" by Turkey.


YPG video footage on Thursday showed half a dozen fighters and youths dancing in Tabqa, and children calling out excitedly: "The dam has been liberated".


Washington has stepped up its support for the YPG in recent days, announcing it would arm the Kurdish fighters in a break with its previous policy of arming only the SDF's Arab fighters.


The move has infuriated NATO ally Ankara.


The US-led coalition said a first consignment of weapons was already in place for delivery and could be dispatched to the Kurds "very quickly".