Kurdish fighters are engaged in fierce gun battles with Islamic State (IS) in the Syrian border town of Kobane, as US-led coalition air strikes continue.
In its latest report, the US Central Command said six air strikes had destroyed IS weaponry around Kobane.
An official inside Kobane said the Kurdish forces were now pushing back the Islamic State fighters.
Seizing Kobane would give the IS jihadists full control of a long stretch of the Syrian-Turkish border.
This has been a primary route for foreign fighters getting into Syria, as well as allowing IS to traffic oil it has captured.
Three weeks of fighting over Kobane has cost the lives of 400 people, and forced more than 160,000 Syrians to flee across the border to Turkey.
At the scene: Paul Adams, BBC world affairs correspondent
The images are powerful enough, but the sound is sometimes overwhelming. At times today, it seemed the entire eastern side of Kobane was one vast street battle. It was relentless. Thick clouds of smoke drifted across the town as grenades exploded.
And all day, another series of massive air strikes; each towering black cloud greeted with delighted cheering by Turkish Kurds who have come to watch, with mounting dread, the assault on their Syrian cousins across the fence.
In groups large and small, they gather as close to the fence as they can get, shouting chants of defiance and solidarity. They are furious with Turkey for what they believe is Ankara's complicity in the rise of Islamic State.
A senior official in Kobane, Idriss Nassan, told news agencies the IS militants had suffered "their biggest retreat since their entry into the city" and that many had been killed.
"They are now outside the entrances of the city of Kobane. The shelling and bombardment was very effective and as a result of it, IS has been pushed from many positions."
But he added: "Kobane is still in danger and the air strikes should intensify in order to remove the danger."
The UK-based Syrian Observatory for Human Rights monitoring group also said that IS fighters had withdrawn from several areas they had earlier controlled.
The BBC's Paul Adams, close to the border, says that at one point a suicide truck bomb driven by a lone jihadi detonated in flames - the Kurds said they managed to blow it up before it reached its target.
US Secretary of State John Kerry said on Wednesday the US was "deeply concerned about the people of Kobane".
But he said: "Horrific as it is to watch the violence, it is important to keep in mind the US strategic objective" - which, he added, was to deprive IS of command-and-control centres and the infrastructure to carry out attacks.
The chairman of the US Joint Chiefs of Staff, Gen Martin Dempsey, told ABC News that IS was becoming "more savvy".
"We have been striking when we can... They don't fly flags and move around in large convoys the way they did. They don't establish headquarters that are visible or identifiable."
Pentagon spokesman Rear Adm John Kirby said the battle against IS was "going to be a long, difficult struggle not solved by military power alone" and that it was a reality that "other towns and villages - and perhaps Kobane - will be taken by IS".
The US Central Command listed the damage done by six coalition air strikes south and south-west of Kobane over Tuesday and Wednesday.
It said an armoured personnel carrier, four "armed vehicles" and two artillery pieces were destroyed.
There were three further air strikes on IS in other parts of Syria and five in Iraq.
Turkey meanwhile remains under intense pressure to do more to help the Kurdish forces in Kobane.
At least 19 people have reportedly been killed in Kurdish protests over Turkey's role.
Kurds are angry that Turkey has prevented fighters crossing the border to fight IS in Kobane.
Last week Turkey's parliament also authorised military action against the jihadists in Iraq and Syria, but so far no action has been taken.
What are Turkey's demands and can they be met?
- To set up a buffer zone on the Turkish border inside Syria, enforced by a no-fly zone to ensure security and ease the refugee influx into Turkey - analysts say this is unlikely as it would require warplanes to disable the Syrian government's air defence system. John Kerry said on Wednesday a buffer zone would need "thorough examination"
- Air strikes to target the forces of Syrian President Bashar al-Assad - the US state department insists that air strikes are to remain focused on Islamic State alone