US-backed Syrian fighters are reported to have overrun an encampment that made up most of the last patch of territory held by the Islamic State (IS) group.
The Syrian Democratic Forces (SDF) alliance said militants refusing to surrender and their families had pulled back to a sliver of land on the bank of the River Euphrates, south of Baghuz.
Clashes are continuing and the SDF warned the battle was not over yet.
Baghuz’s fall would bring an end to the “caliphate” proclaimed by IS in 2014.
The jihadist group once controlled 88,000 sq km (34,000 sq miles) of land stretching across Syria and Iraq, imposed its rule on almost eight million people, and generated billions of dollars from oil, extortion, robbery and kidnapping.
After five years of bloody battles, local forces backed by world powers have driven IS out of all but a few hundred square metres.
At the start of March, the SDF said it had begun its final assault on Baghuz.
But the Kurdish-led alliance was forced to slow its offensive after it emerged that a large number of civilians were holed up inside the village.
As many as 20,000 children and women, many of them foreign nationals, have since been evacuated to an SDF-run camp for displaced people at al-Hol – swelling its population to 70,000 and overwhelming aid workers. Several thousand men have also surrendered and been taken to separate SDF detention centres.
Militants who chose to stay in Baghuz continued to put up fierce resistance, deploying suicide bombers and car bombs, but by Monday they had been driven back to a small patch of open farmland next to the Euphrates that was covered in tents, vehicles and foxholes.
On Tuesday morning, SDF spokesman Mustafa Bali said it had taken control of the encampment and that the last militants had fallen back to the riverbank.
“This is not a victory announcement, but a significant progress in the fight against [IS],” he cautioned in a Twitter post. “Clashes are continuing as a group of [IS] terrorists who are confined into a tiny area still fight back.”
Mr Bali added that hundreds of sick and wounded militants had been captured by the SDF as it took the encampment and that they had been transported to hospitals.
He later told Reuters news agency he believed the last piece of IS-held land would be cleared “very soon”, but warned that “some of the terrorists have taken their children as human shields”.
“We are trying to force them to surrender. If they don’t surrender, we will be forced to deal with them militarily and destroy them,” he added.
The Syrian Observatory for Human Rights, a UK-based monitoring group, meanwhile reported that at least 14 SDF fighters were killed and 30 others injured by IS gunfire and landmine explosions as they attacked the encampment.
An Italian man fighting for the SDF, Lorenzo Orsetti, was killed on Sunday.
Even with its defeat in Baghuz imminent, IS released a defiant audio recording purportedly from its spokesman Abu Hassan al-Muhajir that asserted that the caliphate was not over.
Muhajir accused US President Donald Trump of “falsely” announcing victory over IS in Syria in December, and insisted IS leader Abu Bakr al-Baghdadi was alive.