Observatory director Rami Abdel Rahman said the Syrian army had "control over most of Mleiha, though there are still some clashes".
There was no immediate confirmation from Syrian state media or government officials.
But a military source told AFP that the army was "continuing its operations in Mleiha and realising qualitative successes".
He said Syrian troops had "killed a large number of terrorists and are pursuing others in the fields to the north of the area".
Government troops, backed at times by fighters from the allied Lebanese Shiite group Hezbollah, have been battling there since April.
The area has been under siege for more than a year, and under near-constant bombardment by government forces.
The chief of Syria's air defence forces, General Hussein Isaac, was killed in fighting there in May.
Mleiha is strategic because it lies next to the key rebel bastion of Eastern Ghouta outside the capital, which the regime has also struggled to recapture.
"Taking back Mleiha would allow the regime to protect parts of Damascus from rebel rocket fire on the capital," Abdul Rahman said.
While the government retains firm control over Damascus, rebels have several rear bases around the city, from which they regularly launch rockets.
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