The assault came as China urged Syria's government and opposition to honour commitments to halt armed conflict and Arab foreign ministers were thrashing out a resolution on Syria to be debated at a landmark Arab League summit in Baghdad.
The Syrian Observatory for Human Rights said Syrian forces backed by tanks swept into the central town of Qalaat al-Madiq and nearby villages early on Wednesday after a siege lasting more than two weeks.
The Britain-based monitoring group said the troops entered the town, in Hama province, just after dawn following a 17-day barrage of shelling and heavy gunfire to root out rebels.
It added however that the army was not in full control of the town. "Heavy clashes between regime forces and armed rebels are preventing the army from advancing," the Observatory said. "Intense gunfire and explosions can be heard in nearby villages."
Abu Ghazi, a local activist reached by Skype, told AFP in Beirut that members of the rebel Free Syrian Army had withdrawn from the area because of the regular army's superior firepower.
Qalaat al-Madiq is home to a historic castle that was shelled during the fighting, as seen in videos posted on YouTube.
The army's offensive is part of the regime's efforts to overrun rebel strongholds as it tries to crush an unprecedented year-long revolt, which according to the UN has claimed the lives of more than 9,000 people.
Fierce clashes were also reported on Wednesday across the country, including in northwest Idlib province, central Homs and the southern province of Daraa, cradle of the year-long revolt, the Observatory said.
A draft resolution being debated by the foreign ministers in Baghdad on Wednesday urges the regime to "immediately stop all actions of violence and killing, protect Syrian civilians and guarantee the freedom of peaceful demonstrations for achieving demands of the Syrian people," according to a copy of the text obtained by AFP.
It also calls on the "Syrian government and all opposition factions to deal positively with the envoy (Kofi Annan) by starting serious national dialogue."
"The Syrian subject will have a significant place in discussions," Arab League Secretary General Nabil al-Arabi said of Wednesday's meeting, adding: "I think that the ministers' meeting ... and (Thursday's) Arab summit will support" the plan of Annan, the UN-Arab League special envoy to Syria.
Annan's six-point plan includes calls for a daily two-hour humanitarian ceasefire and access to all areas affected by the fighting in Syria.
Western powers cautiously welcomed a statement by Annan's camp that Assad had given his backing to the plan but US Secretary of State Hillary Clinton said this had to be followed up with rapid action.
"Given Assad's history of over-promising and under-delivering, that commitment (to Annan) must now be matched by immediate actions," Clinton told reporters.
Annan's deputy, Nasser al-Qudwa, was expected in Baghdad to brief foreign ministers on the latest developments, Iraq's Deputy Foreign Minister Labid Abbawi said.
Annan held talks in Beijing on Tuesday with Chinese Premier Wen Jiabao, who pledged his support for his mediation efforts, as did Russian President Dmitry Medvedev when the ex-UN secretary general visited Moscow over the weekend.
China and Russia -- both allies of Syria -- have provoked Western fury by twice blocking UN Security Council resolutions that condemned Assad's regime.
Chinese foreign ministry spokesman Hong Lei told reporters in Beijing on Wednesday that China was "happy" that Damascus had backed the Annan plan and urged both Syria's government and opposition factions to honour their commitments to end armed actions.
Syria's fractured opposition groups, struggling to reach consensus in the face of the regime's crackdown on dissent, agreed in Istanbul late on Tuesday to name the Syrian National Council as their sole representative.
Most opposition factions present signed a statement giving their backing to the SNC, and challenged Assad to prove he was serious about peace. "If he is really serious he must apply this initiative tomorrow," said opposition leader Walid al-Bunni.
"Tomorrow, there must not be any tanks in the streets," he said, adding that regime troops must also be confined to their barracks.