A strategic Kurkish-held town near the Syrian border has come under renewed assault and there are fears it could fall to Islamic State fighters.
Kobane has seen intense fighting over the past three days as Syrian Kurds try to defend the town.
The IS militants have been besieging it for nearly three weeks. Since then, more than 160,000 Syrians, mainly Kurds, have fled across the border.
Television images of the border town of Kobane, broadcast in Turkey, showed a black flag apparently belonging to the jihadist group flying from a building close to the scene of some of the most intense fighting.
Islamic State militants have the town surrounded on three sides and have been using tanks and artillery to bombard Kobane's defenders.
They have also captured a strategic hill that looks down on the town, making its defence increasingly difficult
An official in the town, Idriss Nassan, told the BBC the militants are in control of Mistenur, the strategic hill above the town, and Kobane might soon fall to IS fighters.
Local sources inside Kobani confirmed that the group had planted its flag, but said Kurdish forces had repelled its advances so far.
Ismail Eskin, a journalist in the town, said the flag was only on one building and it was not inside the city. "It's on the eastern side. They are not inside the city. Intense clashes are continuing. The bodies of 25 (Islamic State) fighters are there."
Until recently, the city had hardly been touched by the civil war that has ravaged much of Syria, and even offered a haven for refugees from fighting elsewhere, as President Bashar al-Assad chose to let the Kurdish population have virtual autonomy, Reuters reports.
But now Islamic State wants to take the town to consolidate a dramatic sweep across northern Iraq and Syria, in the name of an absolutist version of Sunni Islam, that has sent shockwaves through the Middle East.
Beheadings, mass killings and torture have spread fear of the group across the region, with villages emptying at their approach and tens of thousands of people fleeing into Turkey from the Kobane region.