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Syrian troops and pro-government gunmen repelled an offensive by rebels and militants on a neighbourhood in the northern city of Aleppo on Tuesday while opposition activists claimed the army carried out a chlorine gas attack in another part of the city, state media and activists said.

The offensive, led by members of al-Qaeda's affiliate in Syria, the Nusra Front, began late Monday with a suicide attack followed by a ground offensive that led to the capture of several buildings in the western Zahra neighborhood, activists said.

The city is witnessing fierce battles and the shelling is daily and intense. -Ibrahim Khatib, activist.

State news agency SANA said troops were able to destroy the vehicle rigged with explosives before it reached its target in Zahra. It added that troops repelled the attack, killing and wounding dozens of insurgents in Zahra and other parts of Aleppo. 

The Britain-based Syrian Observatory for Human Rights said the suicide attack that was carried by members of the Nusra Front, killed 25 troops and pro-government gunmen. The group added that 19 insurgents have been killed since Monday in Zahra.

A former industrial and commercial hub, Aleppo has been carved up between government and rebel-held neighbourhoods since July 2012. With Syria's largest city devastated by three years of fighting, many of its residents have long fled.

"The city is witnessing fierce battles and the shelling is daily and intense," said Aleppo-based activist Ibrahim Khatib via Skype. "The situation is bad and residents are living through difficult humanitarian conditions."

Opposition fighters and Islamic militants have launched a series of attacks in Aleppo since last week, capturing the city's Scientific Research Center that was used as a military base. Activists said Syrian troops and pro-government gunmen have been trying to retake the base with no luck so far.

Chlorine gas

The Local Coordination Committees and the observatory said government troops used chlorine gas on Tuesday during an attempt to regain control of the Scientific Research Center. The Observatory's chief Rami Abdurrahman said there were no casualties among the militants since most of them were wearing masks.

The opposition and the government have blamed each other for chlorine gas attacks in the past.

The fighting is part of a new coordinated offensive in Aleppo by a newly-formed coalition between the Nusra Front and other factions, including the ultra-conservative Ahrar al-Sham group.

The coalition, which calls itself Ansar al-Sharia, has said it seeks to "liberate" Aleppo.

Iran is Assad's strongest regional ally and has extended him billions of dollars in credit since the crisis began in March 2011.

In the northwestern province of Idlib, Nusra Front members kidnapped Iraqi Christian priest Diaa Aziz from the village of Yacoubiyeh, the Observatory said. It said Aziz was kidnapped on Saturday and his whereabouts are not known.

Bankrolled by Iran

Also Tuesday, Syria's parliament approved a draft law ratifying a new Iranian credit line agreement signed on May 19 by the Syrian Commercial Bank and the Export Development Bank of Iran.

The deal, worth around $1 billion, aims to fund imports of goods and commodities as well as other projects.

Iran is President Bashar Assad's strongest regional ally, extending him billions of dollars in credit since the crisis began in March 2011. The United States, Saudi Arabia and several countries in the Persian Gulf suspect Tehran is also shipping him weapons.

In another development, Syrian tribal leaders are in secret talks with UN special envoy for Syria and a senior US general to form a coalition similar to the so-called "Sunni Awakening" during the US occupation of Iraq, according to The Independent.

However, in interviews with the UK newspaper, the tribal leaders said they were wary of being exploited by external powers, which they blamed for their country's current situation.

Syria's conflict has killed more than 230,000 people and wounded at least a million, according to the UN. Over half of Syria's prewar population of 22 million have been forced to leave their homes.