The development followed intense battles between the two sides.
The attempt to seize new ground around the northern city was spearheaded by a coalition of rebel and militant groups, including Syria's rebranded al-Qaeda branch, which now goes under the name of Fath al-Sham.
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Fighting in Aleppo, once Syria's largest city and commercial capital, has intensified in recent weeks. The city near the Turkish border has been split between a rebel-held eastern part and a government-held western part since 2012.
It has become the focal point of the war, encapsulating the bloody stalemate of Syria's conflict, now in its sixth year.
The rebel assault, which began Sunday, targeted key army positions at a cement factory southwest of Aleppo. Fath al-Sham posted video that purported to show militants pounding government positions with artillery and tank fire.
However, opposition activists and militant websites reported on Monday that the rebels and militants retreated from all positions they seized near the cement factory following a massive government counterattack.
The Britain-based Syrian Observatory for Human Rights, which monitors the war through a network of activists on the ground, said at least 35 rebels were killed in the fighting.
A Syrian military official said the Syrian air force launched "precise airstrikes on groupings and movements of terrorist groups south and west of Aleppo" that resulted in the death of dozens of "terrorists." The official spoke on condition of anonymity in line with regulations.
The Syrian government describes all armed groups fighting to topple President Bashar Assad as terrorist.
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