Next to Damascus, Aleppo is the second most important city in Syria. It is the largest city in the country and a vital commercial hub.
Two days ago, the rebels seized two key districts in the city and today, the army counterattacked trying to dislodge them.
Activists in Aleppo, Syria's biggest city and a northern commercial hub, said hundreds of families were fleeing residential districts after the military swept into the Saladin district, which had been in rebel hands for two days.
Fighting was also reported in the densely-populated, poor neighborhood of al-Sakhour.
"The sound of bombardment has been non-stop since last night. For the first time we feel Aleppo has turned into a battle zone," a housewife said by phone from the city.
An escalation in the fighting in Aleppo would prove another challenge to Assad, still reeling from the assassination of four of his top security officials and a six-day attack on the capital which rebels have named "Damascus Volcano".
The president has not spoken in public since the killings, and failed to attend funeral ceremonies for his brother-in-law and two other slain officials on Friday.
The clashes in Aleppo came as U.N. Secretary General Ban Ki-moon said he was sending his peacekeeping chief Herve Ladsous and top military adviser Gen. Babacar Gaye to Syria to assess the situation.
In Damascus, Assad's forces hit back overnight. Helicopters and tanks aimed rockets, machineguns and mortars at pockets of lightly armed rebel fighters who moved through the streets on foot, attacking security installations and roadblocks.
Residents who toured the city on Saturday said it was relatively quiet, though gunfire and explosions could still be heard intermittently in some areas.
Most shops were closed and there was only light traffic - although more than in recent days. Some police checkpoints, which had been abandoned earlier in the week, were manned again.
Most petrol stations were closed, having run out of fuel, and the few that were open had huge lines of cars waiting to fill up. Residents also reported long queues at bakeries and said vegetable prices had doubled.
The capital seems safe - at the moment. But the rebels have shown great ingenuity in putting pressure on the regime despite their inability to match the army in a stand up fight. By attacking several places at once, they place the burden of fighting on the Sunni conscripts who make up the bulk of Assad's army. Those units aren't trusted with heavy weapons so it's a far more even contest when the rebels meet them in battle.
There is little doubt the rebels will be levered out of Aleppo. But the propaganda value of attacking Syria's largest city won't go unnoticed by activists and other opposition members.