Islamic State group fighters have re-entered Palmyra, nine months after losing the ancient Syrian desert city.
Monitoring groups say militants and pro-government forces fought fiercely in the centre of Palmyra.
An activist there told the BBC that the city was now "more or less" in IS hands.
Reports from Palmyra say about 50 Syrian troops were killed and there was an unconfirmed report that the rest were fleeing.
There are concerns for the safety of civilians still in the city.
The surprise setback for the government of President Bashar al-Assad comes as Russian-backed Syrian government forces are closing in on the remaining rebel-held area of the city of Aleppo.
IS held Palmyra and its nearby ruins for 10 months before it was recaptured by Syrian government forces in March.
But the jihadist group launched an offensive earlier this week.
Syrian government forces were backed by the Russian military when they recaptured Palmyra and its famed ancient Roman ruins from IS.
The two militaries have since turned their attention to fighting local opposition forces in Aleppo and Damascus.
Regrouping in the shadows, by Tomos Morgan, BBC News, Beirut
Even though Islamic State was driven out of Palmyra earlier this year, it's understood they never completely left the area.
They were regrouping in the shadows, waiting for the perfect opportunity to strike.
And, while the eyes of the world, and the might of Syrian pro-government forces, were focused on Aleppo, they struck.
Palmyra has been seen as a strategic location for IS, because of its close proximity to oil fields.
Syrian government reinforcements were sent from Aleppo to fight in this new battle earlier this week.
Rebels groups in the country's second city claim that any more government fighters moving south would hinder President Assad's efforts in Aleppo.
Just as it appeared one fight was nearing its end for Mr Assad, another has only just begun.
The activist-run Palmyra Co-ordination Collective said IS militants had seized the city's military warehouse and its northern and western districts after taking government positions, oilfields and strategic heights in the surrounding countryside in a three-day campaign.
The British-based Syrian Observatory for Human Rights said IS fighters had reached the city's hospital and its strategically located wheat silos.
In other developments:
- Turkish-backed forces have entered the IS-held town of al-Bab in northern Aleppo province, the Syrian Observatory says
- The US announces it is sending 200 more military personnel to help the fight against IS in their Syrian "capital" of Raqqa
IS destroyed a number of monuments and beheaded the archaeological director during its 10-month occupation of the Unesco World Heritage site and the adjacent city of Tadmur.
Two 2,000-year-old temples, an arch and funerary towers were left in ruins.
The jihadist group, which has also demolished several pre-Islamic sites in neighbouring Iraq, believes that such structures are idolatrous.
While some treasured monuments were destroyed, much of the historic site was left undamaged.
The city was reclaimed with the support of air strikes by the Russian air force.
IS subsequently lost large amounts of territory across Syria and Iraq.