Elite Hezbollah fighters poured across the border from Lebanon into Syria to lead a withering assault by President Bashar al-Assad's forces on the rebel stronghold of Qusair on Tuesday, activists reported.
In a separate escalation, Israeli and Syrian forces traded fire across the Golan Heights, with the Syrian army claiming it destroyed an Israeli military vehicle that crossed the armistice line.
The developments came after US President Barack Obama expressed concerns to Beirut about Hezbollah's growing role in the conflict, and the State Department warned of the conflict spilling across the region.
The battle for Qusair, in central Homs province, raged for a third day after Assad loyalists launched an offensive to reclaim the town more than a year after rebels seized it.
The Syrian Observatory for Human Rights, a Britain-based activist group, said Hezbollah was leading the attacks on the ground while Assad's warplanes carried out air strikes.
"It's clear Hezbollah is leading the assault," Observatory director Rami Abdel Rahman told AFP, adding that "much of the town is now destroyed".
A source close to the powerful Lebanese group told AFP that "Hezbollah has sent new elite troops to Qusair" and its television channel broadcast images of funerals for five members it said were killed carrying out their "jihadist duty".
The Observatory said at least 31 Hezbollah fighters have been killed in the battle for Qusair since Sunday, as well as 70 rebels, nine soldiers, three paramilitary fighters and four civilians.
Assad and Hezbollah have made reclaiming Qusair, which lies between the Syrian city of Homs and Tripoli in northern Lebanon, a priority in its fight to turn the tide against the two-year insurgency.
"It is important for the Syrians, the Iranians and Hezbollah to control the road" linking Tripoli to Syria, Lebanese analyst Waddah Sharara told AFP.
Tripoli, which has a Sunni Muslim majority, has been a stronghold for Syria's Sunni-led rebels, and some of the Lebanese city's residents have joined the armed uprising.
Scene to frequent Syria-linked violence, it is also home to a minority of Alawites, an offshoot of Shiite Islam to which Assad belongs.
The Syrian regime also considers Qusair of strategic importance because it "needs to maintain its territory and power from Damascus to the coast", according to Sharara.
The Observatory's Abdel Rahman described the rebel response to the assault in Qusair as "fierce," but expressed concern for the fate of some 25,000 trapped civilians.
Pro-regime daily Al-Watan meanwhile said loyalists had taken control of all Qusair's official buildings and "raised the Syrian flag" above them.
State Department spokesman Patrick Ventrell condemned Hezbollah and said its actions in Syria "exacerbate and inflame regional sectarian tensions and perpetuate the regime's campaign of terror".
Although their government has adopted a stance of neutrality, the people of Lebanon are sharply divided over the war in Syria.
Hezbollah has sent fighters to back the regime, which has for years facilitated the transportation of weapons from Iran to the Lebanese group.
Fears of a regional spillover also rose Tuesday after claims from Syria's army that it destroyed an Israeli military vehicle after it crossed the Golan ceasefire line.
"Our armed forces have destroyed an Israeli vehicle with everything that it had in it... The vehicle had crossed the ceasefire line and was moving towards the village of Bir Ajam, situated in the liberated Syrian zone" of the Golan, the army statement said.
The Damascus regime has consistently blamed foreign powers, including Israel, for the conflict in Syria.
But its main regional ally Iran said it was willing to attend a peace conference in Geneva proposed by Russia and the United States.
"The condition for success in Geneva is that all countries with influence on events in Syria participate," foreign ministry spokesman Abbas Araqchi said.
The conference expected to be held in the first half of June seeks to find a political solution to the conflict, which has killed more than 90,000 people since it erupted in March 2011.