US-backed Syrian rebel forces were fighting street battles with ISIS militants after entering their strategic stronghold along the border with Iraq.

US-backed Syrian rebels were forced to retreat from the outskirts of an ISIS-held town at the border with Iraq and a nearby air base on Wednesday after a counter attack by the militants, two rebel sources said.

The US-backed New Syria Army rebel group had launched the attack aiming to capture the town of Al-Bukamal on Tuesday.

One of the rebel sources said Islamic State fighters had encircled the rebels in a surprise ambush. The rebels had incurred heavy casualties and weapons had been seized by the militants, the source said.

A spokesman of the New Syria Army, Muzahem al Saloum, confirmed they had retreated. “We have withdrawn to the outlying desert and the first stage of the campaign had ended,” Saloum told Reuters.