The UN's humanitarian chief said Tuesday he was "very alarmed" by a Houthi rebel advance on the Yemeni government's last northern stronghold of Marib, saying the assault could endanger millions of civilians.

The Iran-backed Houthis this month resumed an offensive to seize oil-rich Marib, some 120 kilometres (75 miles) east of the rebel-held capital Sanaa.

The city's loss would be a major blow for Yemen's government, which is backed by a Saudi-led coalition, but would also threaten catastrophe for civilians, including hundreds of thousands of displaced people sheltering in desolate camps in the region.

"I'm very alarmed about the military escalation in Marib and its impact on the humanitarian situation," said Mark Lowcock, the UN undersecretary general for humanitarian affairs.

"An assault on the city would put two million civilians at risk, with hundreds of thousands potentially forced to flee -- with unimaginable humanitarian consequences. Now is the time to de-escalate, not to add even more to the misery of the Yemeni people."

Pro-government military officials told AFP the rebels had advanced towards the city on two fronts overnight, after heavy fighting with government forces.

Dozens on both sides have been killed in the past 24 hours alone, they said. The total toll from the battle for Marib is unknown, but there are reports of hundreds dead.

On Tuesday, the Houthis held a funeral procession at a mosque in Sanaa, placing the caskets -- each with a picture of the fighter who had been killed -- next to one another on the ground.

"The rebels have advanced north and west of the city... and tightened their grip on hills overlooking supply lines for several fronts," one official said.

The Saudi-led coalition, which entered Yemen's conflict in 2015, has been pounding rebel positions, and the Houthi-run Al-Masirah television on Tuesday reported 13 airstrikes in several areas in Marib.

'Famine risk'

The fighting threatens sprawling camps for internally displaced people, many of whom had fled several times before ending up in Marib.

Until early 2020, Marib had been spared the worst of Yemen's six-year-old conflict, and became a sanctuary for many.

But that relative stability evaporated as fighting flared last year, and despite a brief lull from October, fears are mounting of another humanitarian catastrophe.

"If fighting moves towards populated areas or these displacement sites, we will see people flee again -- and towards locations to the east and south of Marib city with even less resources," International Organization for Migration spokeswoman Olivia Headon told AFP.

"Much of this is desert area, so just think about what any displacement in that direction would mean for families' access to water."

Headon said some 650 families had already been forced to flee, and warned that another shift in the frontlines would lead to further waves of displacement.

Yemen's grinding conflict has claimed tens of thousands of lives and displaced millions, according to international organisations, sparking what the UN calls the world's worst humanitarian crisis.

The UN Office for the Coordination of Humanitarian Affairs (OCHA) on Tuesday announced a pledging conference to raise cash on March 1.

The total they are seeking has yet to be finalised but is "likely to be at the level of 2019, which was $4.2 billion because people are facing the same level of famine risk", OCHA spokesman Jens Laerke said.

The latest upsurge in violence came shortly after Washington decided to remove the rebels from a blacklist of terrorist groups, a move that comes into effect Tuesday, in order to ensure aid deliveries and push for renewed peace talks.

'Jackpot'

Observers say the Houthis want to capture Marib as leverage before entering into any negotiations.

"Marib is the big political and economic jackpot that the Houthis have been dreaming about since the start of the war," Maged al-Madhaji, director of the Sanaa Centre for Strategic Studies, told AFP.

He said the rebels would have control over "a big portion of resources" were they to seize oil and gas-rich Marib.

Houthi political commander Mohamed Ali al-Houthi on Tuesday warned that "a solution won't happen without a genuine dialogue with Sanaa."

Madhaji also said the insurgents were benefitting from Saudi Arabia being on the back foot, especially after the US halted support for Riyadh's Yemen operations.

"The Houthis will not back down, they are benefitting from the global political momentum against Saudi," he said.

"Political conditions could not be better than they are right now for the Houthis."