Syrian Rebels said they had pulled out of Qusayr, which lies on a cross-border supply route with neighbouring Lebanon and where they had fought fierce battles with government forces and Hezbollah guerrillas for more than two weeks.
One Hezbollah fighter told Reuters that they took the town in a rapid overnight offensive, allowing some of the fighters to flee. "We did a sudden surprise attack in the early hours and entered the town. They escaped," he said.
Assad's forces fought hard to seize Qusayr, which had been in rebel hands for over a year, to reassert control of a corridor through the central province of Homs which links Damascus to the coastal heartland of Assad's minority Alawites, an offshoot of Shi'ite Islam.
"Whoever controls Qusayr controls the center of the country, and whoever controls the center of the country controls all of Syria," said Brigadier General Yahya Suleiman, speaking to Beirut-based Mayadeen television.
Mayadeen showed soldiers sticking Syrian flags with photographs of Assad on piles of rubble spilling from shelled buildings across the torn up streets.
"Our heroic armed forces have returned security and stability to all of the town of Qusayr," a statement carried by Syrian state television said.
It marked the latest military gain for Assad, who has launched a series of counter-offensives against mainly Sunni Muslim rebels battling to overthrow him and end his minority Alawite family's four decade grip on power.
More than 80,000 people have been killed in the fighting and another 1.6 million Syrians refugees have fled a conflict which has fueled sectarian tensions across the Middle East, spilled over into neighbouring Lebanon and divided world powers.
The outgunned rebels said they had pulled out of Qusayr "in face of this huge arsenal and lack supplies and the blatant intervention of Hezbollah".
The statement added: "Dozens of fighters stayed behind and ensured the withdrawal of their comrades along with the civilians."
A security source with ties to Syrian forces said the army had control of most of the city but was still sweeping the northern quarter where rebels had dug in in recent days.
The Hezbollah fighter said the rebels had taken their weapons with them, and fled to the nearby village of Debaa where rebels still have some control.
The security source said Assad's forces had opened an escape route into Debaa and the Lebanese border town of Arsal to encourage fighters to leave Qusayr, once home to some 30,000 people.