Forces loyal to President Abedrabbo Mansour Hadi, backed by a Saudi-led coalition, captured the police headquarters and several surrounding streets late yesterday, the official said.
Deadly clashes have shaken the town since loyalist forces launched an offensive nearly three weeks ago to oust the rebels and their allies from the southern part of the Red Sea coastline.
Since Friday alone, at least 19 rebels have been killed and 23 wounded, a medical source in the rebel-held port city of Hodeida further north said.
The rebels' only escape route is to the north after loyalist forces surrounded Mokha from the east and the south, the military official said.
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The waters off the port are blockaded by coalition warships and Apache helicopters.
Mokha was Yemen's main port serving as its export hub for coffee until it was overtaken by Aden and Hodeida in the 19th century.
Nearly 260 combatants have been killed since government forces launched their drive up the Red Sea coastline on January 7. They have already retaken the Dhubab district further south in their biggest advance in months.
In a speech to the Security Council on Thursday, UN envoy Ismail Ould Cheikh Ahmed criticised Hadi for rejecting his proposals for a transition that would see him cede much of his power to a vice president who would oversee a government of national unity.
"President Hadi continues to criticise the proposals without agreeing to discuss them and this will hinder and impede the path towards peace," the envoy said.
The UN has also criticised the coalition air and sea blockade of rebel areas, warning that it is impeding the delivery of desperately needed aid to millions of civilians.
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