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Thousands of civilians have fled Syrian Kurdish forces in the city of Manjib, as the US-backed force closes in on the Islamic State group's northern Syria stronghold.

The Syrian Democratic Forces - an alliance of Kurdish and Arab tribal fighters - are advancing on Manbij from three directions after crossing the Euphrates River from their northeastern stronghold last week. 

The offensive against the militants has caused thousands of Arab civilians to flee in panic, most likely fearing revenge attacks from the Kurdish dominated force.

"Overnight, [the Syrian Democratic Forces] advanced to within five kilometres (three miles) of Manbij from the north," Syrian Observatory for Human Rights head Rami Abdel Rahman told AFP.

Late on Monday, anti-IS fighters were within a mile of the town to the south, and around five miles to the east.

"[IS] has begun allowing civilians to flee towards the west, whereas before they had banned anyone from leaving," Abdel Rahman said.

IS fighters were holding their positions but thousands of residents had left. Families of foreign fighters had reportedly fled to IS-held Deiz az-Zour and Raqqa.

The advance comes as 17 civilians were killed in air raids on a busy marketplace in an IS-held town in eastern Syria as shoppers bought food to break their fast during the holy Muslim month of Ramadan.

Manbij lies at the heart of the last stretch of territory along the Turkish border still under IS control, and an important supply route for its other posessions in Syria.

The Syrian Democract Forces offensive is aimed at seizing it and denying the militants any opportunity to smuggle recruits or funds across the border.

Washington, which has more than 200 special forces troops deployed with the anti-IS force, has said some 3,000 Arab fighters are taking part in the assault, backed by around 500 Kurds.

The US-led coalition battling IS in Iraq and Syria has carried out heavy air strikes in support of the offensive.

[IS] has begun allowing civilians to flee towards the west, whereas before they had banned anyone from leaving. - Rami Abdel Rahman

The militants are facing multiple assaults in Syria.

In Raqqa province - where IS' de facto Syria "capital" lies - both the Syrian Kurdish-rebel force and Russian-backed regime fighters are advancing from opposition directions towards the country's largest dam, and the adjacent IS-held town of Tabqa.

If the rival offensives meet up, it would cut the Manbij border pocket off from IS' self-declared "capital" Raqqa, which lies downstream.

The UN, meanwhile, backtracked on its plan to move ahead with airdrops of humanitarian aid to Syria, saying it was focusing for now on security access for land convoys.

"Our main focus is on land delivery, given the challenges in terms of safety and logistics of air deliveries," UN spokesman Stephane Dujarric said.

While fighting for Tabqa and Manbij intensifies, it appears the battle for Raqqa city - which would be a much more symbolic victory - has taken a backseat.

Syrian regime forces and loyalist militias have failed to advance on Ithriyah, the road connecting Hama and Raqqa that the regime is attempting to control in order to enter the IS-held province.