Yemen's warring sides have deployed reinforcements to the outskirts of a strategic central district, a government military source said Monday, after Houthi rebels made significant gains in the nearby province of Al-Bayda.
The possible fall to the rebels of the district of Bayhan, near the border with the government's last northern stronghold of Marib, could pose a major threat to the government.
The Iran-backed Houthis escalated their efforts to seize Marib in February, and the fighting has killed hundreds on both sides.
Control of the oil-rich region would strengthen the Houthis' bargaining position in peace talks.
The battle has also raised fears of a humanitarian catastrophe, as many Yemenis had fled to the area to escape fighting in other parts of the country.
A government military source told AFP that fighters from both sides were dispatched to the outskirts of Bayhan after the Houthis seized control of two districts in nearby Al-Bayda province.
Al-Bayda's deputy governor Ahmed al-Humayqani told AFP on Sunday that the insurgents had taken control of the Nateh and Naman districts, displacing many civilians.
The districts "fell without a major military confrontation", he said, adding that about 80 percent of residents had fled their homes.
"We, in Al-Bayda, are facing a humanitarian catastrophe, and we call on organisations to intervene urgently to help alleviate people's suffering," said Humayqani.
Another government official, who spoke on condition of anonymity, said the Houthis seized Nateh on Saturday after the withdrawal of government troops who are backed by a Saudi-led military coalition.
Yemen's conflict flared in 2014 when the Houthis seized the capital Sanaa, prompting Saudi-led intervention to prop up the internationally recognised government the following year.
While the UN and Washington are pushing for an end to the war, the Houthis have demanded the re-opening of Sanaa airport closed since 2016, before any ceasefire or negotiations.
The fighting has killed tens of thousands and left some 80 percent of Yemenis dependent on aid, in what the UN calls the world's worst humanitarian crisis.
The war has also displaced millions of people and left many on the brink of famine.