Rawa is the last town still held by IS apart from Albu Kamal, Al-Qaim's twin town just across the Syrian border where the jihadists were still battling Damascus troops and allied forces yesterday after mounting a surprise counterattack late Thursday.
Rami Abdurrahman of the Britain-based Syrian Observatory for Human rights said that Syrian government forces and their allies "are now between one to two kilometers from the city limits".
Clashes were still raging there on Saturday, he said.
Reports that ISIS has lost its "last" stronghold in Syria may have been premature.
"It was Daesh's biggest ambush operation, tricking the attacking forces into thinking they had controlled the city", Abdel Rahman said, using the Arabic acronym for IS.More news: Twitter Put a Pause on Handing Out Verifications
The recapture of Rawa would mark the final battleground defeat of the group in Iraq and the demise of the "caliphate" declared by Abu Bakr al-Baghdadi in 2014 over large expanses of Iraq and Syria.
Losing it completely would have capped the group's reversion to an underground guerrilla organisation with no urban base. "Albu Kamal's liberation is very important because it means the failure of the IS terrorist group in the region", the army statement said.
Across the border on Saturday, Iraqi forces launched an assault to capture the last pocket of IS territory in their country.
Rumana, on the north side of the Euphrates River, was liberated in a major offensive by government troops and allied militia to retake the last pocket of IS-held territory in Iraq, the commander said.