The lightning advance from the southwest with Russian air support brought the army to within dozens of kilometres (miles) of the Euphrates Valley town of Tabqa, site of the country's biggest dam, the Syrian Observatory of Human Rights said.
The dam, some 50 kilometres (30 miles) upstream from the jihadists' de facto Syrian capital Raqa city, is also the target of the Washington-backed offensive which Kurdish-led fighters launched late last month.
Regular army troops were backed by militia newly trained by the regime's ally Russia, Observatory director Rami Abdel Rahman told AFP.
He said the twin offensives which threaten to cut off IS-held Raqa from jihadist-held territory along the Turkish border raised suspicions that Moscow and Washington were covertly coordinating operations by their respective Syrian allies.
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"It seems there has been an undeclared coordination between Washington and Moscow," he said.
Russian Foreign Minister Sergei Lavrov discussed Syria with US Secretary of State John Kerry in a telephone call on Saturday, the foreign ministry in Moscow said, without giving details.