Syrian government forces encircled a key rebel area northwest of Damascus on Thursday that serves as the capital's main water supply, a monitoring group said.

Clashes have rocked the Wadi Barada region for more than a month, despite a fragile nationwide truce aimed at smoothing the way for upcoming peace talks in Kazakhstan.

On Thursday, forces loyal to President Bashar al-Assad cut the route between Wadi Barada and adjacent rebel-held territory in Qalamoun, according to the Syrian Observatory for Human Rights.

"After an advance from the north on Wednesday, regime forces and allied fighters, primarily (Lebanese Shiite movement) Hezbollah, besieged Wadi Barada," said Observatory head Rami Abdel Rahman.

He said around 20,000 people were in the area under siege.

Around 5.5 million people in Damascus and its suburbs have been without water since fighting intensified in Wadi Barada in late December.

The regime is seeking to gain full control over the area -- including the key Ain al-Fijeh spring -- to restore running water to the capital.

A military source confirmed to AFP that government troops besieged Wadi Barada on Thursday and that fighting was ongoing.

"Ain al-Fijeh has practically fallen militarily. The armed groups are surrounded... and have no choice but to accept the settlement or the continuation of the military operation," the source said.

"We prefer the first choice, so the maintenance workers can go in quickly and repair the damage so water can begin pumping again," he added.

Last week, locals struck a truce with Syrian authorities to allow the water pipes to be repaired, but the deal was called off after a mediator was killed on Saturday.

The army has fiercely pressed its assault since then, leaving nearly a dozen civilians dead in shelling on a village in Wadi Barada at the weekend.

More than 310,000 people have been killed since Syria's uprising broke out in March 2011 with protests demanding Assad step down.