The so-called Popular Resistance Committees, loyal to exiled President Abedrabbo Mansour Hadi, have seized several strategic locations in central Taez, military officials said.
However, the Iran-backed Shiite Huthi rebels and their allies still control entrances to Taez, including its eastern gate to Sanaa, which has been under their control since September, as well as other parts of the city, the sources said.
The officials reported heavy fighting around the presidential palace in Taez and the nearby central security forces' camp -- held by the rebels.
However, AFP could not confirm the toll from independent sources and the rebels rarely acknowledge their losses.
Loyalist forces have retaken the intelligence headquarters and a fortress from which the rebels had been shelling Taez, as well as the highest peak overlooking the city on Jabal Sabr, Sharaabi told AFP.
Saudi-led Gulf coalition warplanes, bombing rebel positions across Yemen since March, carried out several fresh air strikes in Taez early on Sunday, witnesses said.
The latest advance on Taez comes after loyalist forces made sweeping gains in south Yemen, starting with their recapture of main city Aden in mid-July.
In a telephone call, Hadi reassured the 35th Brigade's commander in the city Thursday that "Taez is on its way to being liberated and support will soon reach it".
Military sources say the coalition has provided Hadi's supporters with modern heavy equipment, including tanks and armoured personnel carriers, and Yemeni soldiers trained in Saudi Arabia.
The conflict has cost nearly 4,300 lives since March, half of them civilians, according to UN figures, while 80 percent of Yemen's 21 million people have been left in need of aid and protection.
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