In a statement, the Syrian Democratic Forces said it had opened a new front against IS on the northern edge of Raqqa, describing this as "a feature of the final stages of the Euphrates Wrath campaign, which is nearing its end".
Heavy bombing by the US-led coalition forced ISIS jihadists to retreat to five zones in the past 48 hours, said SOHR director Rami Adbel Rahman.
Hundreds of thousands of people have been killed and millions more displaced since civil war broke out in Syria following protests against President Bashar al-Assad in March 2011.
In Iraq, government troops backed by the USA led coalition are pushing hard against the last swaths of territory still held by IS.
IS has pulled out of the north of the city and abandoned its grain silos and mills.
It was now confined to the city centre, in government administrative buildings, the stadium and tunnels.
They began their advance from the west, while USA backed forces attacked from the north and captured a big swath of territory; nearly 200 square miles.
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But June 6 this year marked the intrusion part of the battles into the heartland of IS in the city of Raqqa, which was declared by IS as its de facto capital in 2014. "It quickly became the synonym of the greatest atrocities committed by extreme Islamists".
Abdel Rahman said the siege had worn down IS's defensive capabilities.
The Observatory said hundreds of ISIS militants have been killed in recent weeks and those who remain are running out of weapons and food.
The Britain-based Syrian Observatory for Human Rights said on Wednesday nearly all of the city was now held by the Syrian Democratic Forces (SDF).
IS has used mines, snipers, auto bombs, and weaponised drones against the SDF offensive. It is estimated that there are still fewer than 10,000 to as much as 25,000 civilians left in the city.
"We will continue the campaign until we achieve our aim", Jihan Sheikh Ahmed, the SDF's spokeswoman for the Raqa offensive, told AFP.