The advance came as Assad's opponents warned his regime's "barbaric and destructive" assault on Qusayr could torpedo US-Russian attempts to organise a conference on ending two years of bloodshed in the country.
The Arab League called an emergency meeting for Thursday, ahead of the conference, as the opposition Syrian National Council (SNC) demanded it meet and "stop the massacre in Qusayr".
Forces loyal to Assad launched today's offensive by heavily bombarding Qusayr with artillery and warplanes early in the morning.
"The Syrian army controls Qusayr's main square in the centre of the city, and the surrounding buildings, including the municipality building," said the source.
State television said: "Our valiant troops have restored security and stability to the Qusayr municipality building and surrounding buildings and are continuing to hunt down terrorists in the town."
The Syrian Observatory for Human Rights said regime troops began carrying out air strikes backed by artillery fire against the town early today, before the group operation started.
Troops were entering from the south, and fighters from the Lebanese militant group Hezbollah, a key ally of the Syrian regime, were "playing a central role," he added.
"If the army manages to take control of Qusayr, the whole province of Homs will fall," he said.
The group said the army carried out additional air strikes this afternoon, and that at least 40 people were killed throughout the day, including 21 rebel fighters.
In recent weeks, government troops backed by Hezbollah and members of the National Defence Forces, a pro-regime militia, have taken a string of villages and reportedly surrounded Qusayr on three sides.
The fighting has spilled over into Lebanon, and today the country's National News Agency said eight rockets fired from Syria landed in Lebanese territory, without causing any damage or injuries.
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