Syrian tanks and troops attacked Zabadani, a town of 40,000 near the Lebanese border on Friday, but made little progress against army deserters and insurgents defending it, Kamal al-Labwani told Reuters, citing residents reached briefly by telephone.
It was the biggest military assault against opponents of President Bashar al-Assad since Arab observers began work on Dec. 26 to check Syria's compliance with an Arab peace plan.
Security forces trying to crush anti-Assad protests killed 12 civilians, including a 6-year-old girl, on Friday, the British-based Syrian Observatory for Human Rights said. The state news agency SANA said armed "terrorists" had killed six soldiers or policemen.
Violence has raged on despite the Arab observer mission, which has been castigated even by some of its own members for failing to halt the bloodshed and buying Assad time.
"This is the last week in the month agreed between Syria and the Arab League and will witness a wide deployment of the monitors," said a source at the Cairo-based League, adding that 40 monitors were ready to join the team of about 165 whenever its leader, Sudanese General Mohammed al-Dabi, requested them.
Plans to expand the team were delayed last week after 11 monitors were slightly hurt in an attack on their convoy by a pro-Assad crowd in the port of Latakia on Monday. That incident also prompted the monitors to suspend work for two days.
Dabi is due to report to the Arab League on Thursday and Arab foreign ministers will then decide whether to continue the mission, or possibly refer Syria to the U.N. Security Council.
The League chief, Nabil Elaraby, said on Friday he feared a 10-month-old struggle to oust Assad could slide into civil war.
Syrians have kept up a campaign to end four decades of Assad family rule since March despite a crackdown by the authorities that the United Nations says has killed more than 5,000 people.
Some, including army deserters, have taken up arms in recent months. Syrian authorities say foreign-backed "terrorists" have killed 2,000 soldiers and police since the revolt began.
Armed clashes, now punctuating what began as a non-violent protest movement, have raised fears of a full-scale conflict in Syria, a Sunni Muslim-majority country of 23 million which also has Alawite, Druze, Christian and Kurdish minorities.
Syria, bordering Lebanon, Turkey, Iraq, Jordan and Israel, is at the heart of the volatile Middle East, where its closest allies are Iran and the Lebanese Hezbollah group.
"The Syrian authorities must respond to the legitimate democratic aspirations of the Syrian people," U.N. Secretary-General Ban Ki-moon, who is visiting Lebanon, was quoted as saying by the Beirut newspaper an-Nahar.
He also urged the Security Council, where Russia and China have blocked firm action on Syria, to speak with one voice.
A ship carrying Russian ammunition docked in Syria this week, after it had been temporarily halted during a refuelling stop in Cyprus, stirring concern in Washington.