The four villages in the northern province of Aleppo lie along the rebels' supply line from Turkey, which is a major backer of Syria's opposition.
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"IS is trying to seize control of these villages from rebels to cut their supply route between Aleppo city and its outskirts, and the town of Azaz," a rebel bastion near the border, said Observatory head Rami Abdel Rahman.
He said two IS suicide bombers, one using a suicide belt and one in a bomb-laden car, began the assault on the villages on Saturday night.
The ensuing clashes, which lasted throughout the night, left at least 10 IS extremists and 18 rebel fighters dead, Abdel Rahman added.
The extremist group has swept through territory in Iraq and Syria in an effort to build a cross-border "caliphate," and sees both the regime of Bashar al Assad and rival rebel factions as its enemies.
On Sunday, Syria's official news agency SANA reported a new death toll for deadly rebel rocket fire on the Syrian capital Damascus the previous day.
"The number of victims in the rocket fire Saturday on Damascus by terrorist organisations has risen to 11 dead, including three children, and 46 wounded including some in critical condition," the agency reported.
The agency said 10 of the dead were killed in the central Ath-Thawra neighbourhood, and that the rocket was launched from the rebel-controlled Jobar district.
The Britain-based Observatory, which uses a broad network of sources in Syria to gather information, confirmed the new toll.
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And on Saturday, more than 1,000 people took to the streets in the coastal city of Latakia, heartland of the Assad regime, to protest the killing of a Syrian air force official.
Colonel Hassan al Sheikh was shot dead earlier this week by Sleiman al Assad, a cousin of President Assad, after a dispute at a checkpoint, the Observatory said.
Saturday's demonstrators said they would continue protests until Sleiman al Assad is executed.
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