Beirut, Apr 20 (AP) Islamic State militants agreed to give up their last pocket in Damascus today, state media reported, as the government seeks to retake the entire Syrian capital and its surrounding areas for the first time since 2011.

The capitulation followed a week of escalations by pro-government forces against the IS-held Hajar al-Aswad neighborhood and Yarmouk Palestinian camp in Damascus. Pro-government forces bombed the two areas and blanketed them with artillery fire in a crescendo of violence captured by the state-affiliated Central Military Media outlet today.

The UN's refugee agency warned that the spiraling violence was a threat to 12,000 Palestinian refugees still there - Palestinians who came to Syria since 1948, and their descendants.

Militants were given the option to stay and reconcile with the government or leave on buses to IS-held territory in the eastern Syrian desert, the SANA state news agency said. It did not say when the relocations would begin.

The Britain-based Syrian Observatory for Human Rights monitoring group reported the militants had accepted the deal.

But government airstrikes on Yarmouk resumed this evening, putting the fate of the agreement in question.

In 2012, Syrian rebels and army defectors pushed pro-government forces out of Yarmouk in response to a spiraling crackdown by state security services against anti-government protests.

Pro-government forces, including Palestinian factions, responded by putting the camp under siege, eventually cutting off food and water by 2014, and bombing and shelling it continuously.

Residents trickled out to neighboring areas, and the camp's population dwindled from an estimated 200,000 people to a few thousand today, not including the IS militants, who took over the camp following a battle with rebels in 2015.

Earlier on Thursday, the Damascus-based Palestinian official Khaled Abdelmajid said the government was giving hard-liners two days to leave Yarmouk and Hajar al-Aswad, leaving the government with control of the two neighbourhoods.

That initial deal appeared to have collapsed. It was not immediately clear why. Also Friday, the U.S.-led international coalition against the Islamic State group announced the capture of a Syrian-born German IS operative previously tied to a 9/11-linked jihadist cell. U.S. Col. Ryan Dillon said the coalition's local allies in Syria captured Mohammed Haydar Zammar in northeast Syria about four weeks ago.

Zammar, a Syrian-born German, was a key member of a Hamburg jihadist cell that included three of the September 11 suicide pilots. Dillon said Zammar was in custody of the Syrian Democratic Forces.

Syria's central government has taken back control of dozens of towns and villages around the capital in recent weeks following a ferocious military campaign against rebels in the eastern Ghouta suburbs.

That campaign ended in allegations of a chemical weapons attack that activists say killed more than 40 people in Douma, the largest town in that area. Rebels in Ghouta surrendered their towns in quick succession - then handed over a separate town, Dumayr, further afield from Damascus, this week.

The U.N.'s humanitarian arm, OCHA, said more than 55,000 fighters and civilians were bused out of the Damascus region to rebel-held areas in north Syria in recent weeks. U.N. officials and human rights groups say the evacuations amount to forced population displacement and may be a war crime. (AP)

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