Deadly clashes have shaken Mokha since loyalist fighters launched an offensive nearly three weeks ago to oust the Iran-backed Shiite Huthi insurgents and their allies from Yemen's southwestern coast.
Fresh fighting has left 20 rebels and seven pro-government fighters dead over the past 24 hours, with dozens more wounded, a hospital official said.
"The city centre is still in the hands of the Huthis, while the loyalist forces have taken up positions on three axes around the city and cut off the rebels' supply route between Mokha and Taez" further east, a military official said.
The forces loyal to President Abedrabbo Mansour Hadi are supported by Saudi-led coalition aircraft that have attacked a military camp and a rebel convoy in the past 24 hours, the military official said.
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Nearly 230 rebel and loyalist fighters have been killed since Hadi's forces launched a vast offensive on January 7 to drive the Huthis from Yemen's southwestern coast.
Pro-government forces have succeeded in recapturing the Dhubab district north of the Bab al-Mandab strait, a key maritime route connecting the Red Sea and the Indian Ocean.
Aided by troops loyal to former president Ali Abdullah Saleh, the Huthis overran the capital Sanaa in September 2014 and advanced on other regions of the impoverished Arabian Peninsula nation.
The World Health Organization says more than 7,400 people have been killed since the coalition launched its intervention in support of Hadi in March 2015.
But UN humanitarian coordinator Jamie McGoldrick said last week that as many as 10,000 civilians may have died.