By Dominic Evans and Khaled Yacoub Oweis
BEIRUT/AMMAN July 21 (Reuters) - Syrian soldiers and armoured troops pushed into a rebel-held district of Aleppo on Saturday after striking back in Damascus against fighters emboldened by a bomb attack against President Bashar al-Assad's inner circle.
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 neighbourhood 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.
"I feel depressed and lonely because I have to stay indoors as there is nothing good outside. Everyone else is depressed as well," said a woman in her 50s in west Damascus who supports Assad's opponents.
An opposition activist said he had sneaked back into the Midan district, which Assad's forces seized back from rebel control on Friday, only to find his house looted.
"The doors were broken and I walked into several houses which were in the same condition," said Fadi al-Wahed. "Safes were broken into, drawers broken and furniture and television screens missing. Three army trucks were parked under the ring road flyover with loot."
HUNDREDS KILLED
The Syrian Observatory for Human Rights, an opposition group which monitors the violence in the country, said 240 people had been killed across Syria on Friday, including 43 soldiers.
The Observatory's combined death toll over the past 48 hours stands at 550, making it the bloodiest two days of the 16-month-old uprising against Assad.
On Wednesday, a bomb killed four members of the president's narrow circle of kin and lieutenants, including his powerful brother-in-law, defence minister and intelligence chief.
In the days since, rebels have pushed deep into the heart of the capital and seized control of other towns. On Thursday, they captured three border crossings with Iraq and Turkey, the first time they have held sway over Syria's frontiers.
The surge in violence has trapped millions of Syrians, turned sections of the capital into ghost towns, and sent tens of thousands of refugees fleeing to neighbouring Lebanon.
The U.N. Security Council has approved a 30-day extension for a ceasefire observer mission, but Secretary General Ban Ki-moon has recommended changing the focus of its work to pursuing prospects for a political solution - effectively admitting there is no truce to monitor.
Diplomats said only half of the 300 unarmed observers would be needed for Ban's suggested shift in focus, and several monitors were seen departing Damascus on Saturday.
Speaking two days after Russia and China vetoed a resolution to impose further sanctions on Assad's government, Ban called on the U.N. Security Council to "redouble efforts to forge a united way forward and exercise its collective responsibility".
"The Syrian government has manifestly failed to protect civilians and the international community has collective responsibility to live up to the U.N. Charter and act on its principles," he said.
Regional and world powers are now bracing for what could be the decisive phase of the conflict, hoping to wrench Assad from power without unleashing a sectarian war that could spill across borders.
"The regime is going through its last days," Abdelbasset Seida, the leader of the main Syrian opposition umbrella group, the Syrian National Council, said in Rome, predicting a dramatic escalation in violence.
A senior Syrian military defector said Assad could now rely only on an inner core of loyal army regiments, saying "the collapse of the regime is accelerating like a snowball".
But General Mustafa Sheikh also said Assad's forces were transporting chemical weapons across the country for possible use against rebel forces.
"The regime has started moving its chemical stockpile and redistributing it to prepare for its use," said Sheikh, citing rebel intelligence obtained in recent days.
His comments could not be verified, but Israel said on Friday it would consider military action if needed to ensure Syrian missiles or chemical weapons did not reach Assad's allies in Lebanon, the Shi'ite Islamist movement Hezbollah.
"I have instructed the military to increase its intelligence preparations and prepare what is needed so that ... (if necessary) ... we will be able to consider carrying out an operation," Defence Minister Ehud Barak said. (Additional reporting by Igor Ilic in Brijuni, Croatia and Suleiman al-Khalidi in Hacipasa, Turkey; Editing by Andrew Osborn)