Smoke billowed over the key Syrian border town of Kobane on Sunday as Kurdish fighters supported by US-led air strikes battled to hold back intensified attacks by Islamic State jihadists.

IS fighters seized part of a strategic hill overlooking the town late on Saturday. But their progress was slowed by new strikes from the coalition of Washington and Arab allies.

The dusty town on the Turkish border has become a crucial battleground in the international fight against IS, which sparked further outrage this weekend with the release of a video showing the beheading of Briton Alan Henning.

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The video – the latest in a series of on-camera beheadings of Western hostages – included a threat to another hostage, US aid worker Peter Kassig, whose parents made an impassioned plea for his release.

Heavy fighting raged around Kobane late Saturday as the jihadists pressed their 17-day siege of the town, said the Syrian Observatory for Human Rights, a Britain-based monitoring group.

“IS succeeded on Saturday night in taking the southern part of the Mishtenur hill,” said Observatory director Rami Abdel Rahman.

If the jihadists seize the hilltop, he said, “the whole town of Kobane will be in their sights and it will be easier to take.”

Abdel Rahman said seven new coalition strikes against IS positions were carried out in the area late on Saturday and the strikes were hindering the jihadists’ advance.

The battle was continuing early on Sunday, with shelling echoing from Kobane – also known as Ain al-Arab – and fighter jets roaring overhead.

Dozens of fighters from IS have been reported killed in the latest coalition raids.

Kurdish protesters gather on a hill opposite Kobane. Photo: Getty

The Observatory, which relies on a network of local sources, said at least 33 IS fighters and 23 of the town’s Kurdish defenders were killed on Saturday.

IS began its advance on Kobane on September 16, seeking to cement its grip over a long stretch of the Syria-Turkey border.

The offensive has prompted a mass exodus of residents from the town and the surrounding countryside, with some 186,000 fleeing into Turkey.

Regional leaders have pleaded for the coalition to step up its air campaign around Kobane and a local activist, Mustapha Abdi, said Saturday’s air raids had made a crucial difference.

“If the coalition had not carried out strikes yesterday (Saturday), IS would now be in the centre of Kobane,” he said.

Extremist Sunni Muslim group IS has seized control of large parts of Syria and Iraq, declaring a “caliphate” in June and imposing its harsh interpretation of Islamic law.

The group has been accused of carrying out widespread atrocities, including attacks on civilians, mass executions, abductions, torture and forcing women into slavery.

Alan Henning holding a child in a Syrian refugee camp.

It has also released videos of the on-camera beheadings of two US journalists, a British aid worker and on Friday of Henning, a 47-year-old British volunteer driver who went to Syria with a Muslim charity.

Kassig, the US aid worker, was shown alive in the video and threatened by a knife-wielding militant.

In a three-minute video posted on YouTube on Saturday, Kassig’s parents pleaded for his safe release.

“We implore his captors to show mercy and use their power to let our son go,” Ed Kassig said, referring to his son by his adopted Islamic name of Abdul Rahman.

He revealed that his son had disappeared in Syria on October 1 last year and had converted to Islam after forming a deep attachment to the people of the strife-torn region.

Paula Kassig, wearing a headscarf, said she and her husband had received messages from their son during his captivity.