Islamic State fighters were locked in battle with US-backed Syrian forces in Minbij on Saturday, disregarding an ultimatum from the advancing Kurdish-led forces to leave the northern Syrian town.
"The 48-hour ultimatum, which was originally aimed to protect civilians and secure their well-being, has ended with battles still ongoing on all fronts in Minbij," Brigadier Talal Silo, spokesman of the Democratic Forces of Syria (DFS), told dpa by phone.
On Thursday, the DFS Minbij Military Council gave the jihadist group's fighters 48 hours to leave the town, saying it would be their "last opportunity."
The Kurdish-led forces surrounded the town in June in an attempt to cut off Islamic State's access to the nearby Turkish border.
Thursday's ultimatum came in response to an initiative from Minbij locals, the Britain-based Syrian Observatory for Human Rights said.
It was issued two days after at least 56 people were reportedly killed by US-led strikes in support of DFS in the village of al-Tukhar al-Kabir north of Minbij.
Activists in the area have put the death toll from the raid at more than 100. UN children's agency UNICEF on Thursday noted reports that more than 20 children were killed in the strikes.
Colonel Chris Garver, military spokesman for the US-led alliance against Islamic State, said it was reviewing all available evidence to determine if the reports warranted a formal investigation.
The strikes took place after DFS fighters observed a large group of Islamic State fighters in the area who appeared to be preparing a counter-attack against them, Garver told the press from Baghdad on Friday.
Observatory chief at the time told dpa the US-allied strikes hit the civilian gathering in the village of al-Tukhar al-Kabir by mistake.
The watchdog said Friday said about 200 civilians managed to flee Minbij.
It said that a woman among those fleeing died when she stepped on a land mine while trying to escape with her children.
Islamic State was using civilians in Minbij as "human shields and bait," Garver charged.
Islamic State militants have put up fierce resistance to the DFS offensive, mounting a series of counter-attacks from areas that remain under their control outside the DFS cordon around the city.