Syrian troops and allied militiamen on Thursday expelled Islamic State group fighters from Albu Kamal, the last significant town the jihadists still held in their disintegrating "caliphate".

The jihadists' latest rout left them with only the dregs of a self-styled "state" that once spanned huge territory in Iraq and Syria, with surviving IS fighters melting away into desert hideouts.

Anti-IS forces stormed into the town just across the border from Iraq on Wednesday and while fighting was initially reported as fierce, the outcome of one of IS's last major battles was never in doubt.

"Our armed forces units, in cooperation with allied and auxiliary forces, have liberated the town of Albu Kamal in Deir Ezzor province," a statement carried by the official SANA news agency said.

"Albu Kamal's liberation is very important because it means the failure of the IS terrorist group in the region," the army statement said.

The Syrian Observatory for Human Rights, a Britain-based monitor of the war, said much of the fighting had been done by allied militias rather than the regular army.

The capture of Albu Kamal was be the last in a string of setbacks that saw IS lose its urban bastions of Mosul and Raqa within a few weeks and its embryonic state shrink to a rump.

Leading the battle for the town were the Lebanese Shiite militant group Hezbollah and advisers from Iran's elite Revolutionary Guards, as well as fighters from mostly Shiite Iraqi militias, according to Observatory chief Rami Abdel Rahman.

He said that even as IS still controlled half of the town and fighting raged earlier Thursday, the jihadists retained one escape route to the north.

Abdel Rahman confirmed that Albu Kamal had been fully retaken but said that "IS withdrew to desert areas in eastern Deir Ezzor" province, where they are likely to encounter US-backed Kurdish-led fighters.

- Thousands displaced -

The jihadists' flight from the town, where IS leaders used to meet and were once considered untouchable, caps a process which has seen the group relinquish any ambition as a land-holding force and return to the desert to fight a clandestine guerrilla war.

Many of the group's top leaders have been killed as Syrian and Iraqi forces with backing from Russia, Iran and a US-led coalition rolled back the territorial losses that saw the jihadists declare a "caliphate" roughly the size of Britain in 2014.

But the whereabouts of the first among them, self-proclaimed "caliph" Abu Bakr al-Baghdadi, remains unclear. He has been reported killed or wounded many times but IS has never offered ay confirmation.

The capture of the group's last urban stronghold had always looked to be a matter of days after Syrian forces last week retook provincial capital Deir Ezzor and Iraqi forces reconquered Albu Kamal's twin town of Al-Qaim just over the border.

There was little to slow the advance of the Syrian and its allies after their victories further up the Euphrates valley, but while the military phase of the fight against IS was nearing its end, the humanitarian crisis it sparked was still in full swing.

"In the last few weeks, an estimated 120,000 people were displaced from Albu Kamal," the United Nations' humanitarian affairs office in Damascus said.

IS still has a small presence in the east of Homs province, in the southern outskirts of Damascus and in the southern province of Daraa.

It also holds the small Iraqi town of Rawa down the Euphrates valley from Al-Qaim.

A rival jihadist alliance led by Al-Qaeda's former Syria affiliate controls much of the northwestern province of Idlib and adjacent areas as well as pockets of territory elsewhere.

It has come under attack by Russian-backed government forces and by Turkish-backed rebels.

More than 330,000 people have been killed in Syria since the conflict began with anti-government protests in March 2011, which spiralled into a complex, multi-front war that drew in jihadists and armed forces from around the region and beyond.

Source: AFP