Fierce fighting raged for a second straight day in Syria's commercial capital Aleppo on Sunday as troops pressed an offensive against rebel-held areas of the city, sparking fears for trapped civilians.

As rebel fighters held out against the superior firepower of President Bashar al-Assad's regime, the head of the exiled opposition called on foreign governments to provide them with heavy weapons.

International peace envoy Kofi Annan urged both sides to hold back, saying that only a political solution could end a conflict that human rights monitors say has killed more than 20,000 people since the uprising erupted in March 2011.

An activist who gave his name as Abu Alaa said there was renewed shelling of the Salaheddin district in southwest Aleppo where rebels repulsed a ground assault on Saturday.

He said there were also clashes between troops and rebels in the Bab al-Nasr, Bab al-Hadid and Old City neighbourhoods of the city centre.

The central districts' "narrow streets and alleys, with covered markets and densely populated buildings, are impossible to penetrate with tanks or shelling from afar," he said.

After massing for two days, troops backed by tanks and helicopter gunships on Saturday launched a ground assault on Salaheddin, where rebels concentrated their forces when they seized much of Aleppo on July 20.

Both sides claimed to have made advances, but a correspondent reported that rebels had largely repulsed the army's offensive.

Civilians in the city of some 2.5 million people crowded into basements seeking refuge from the intense bombardment by artillery and helicopter gunships, the correspondent said.

Colonel Abdel Jabbar al-Oqaidi of the rebel Free Syrian Army said his forces had repulsed the ground assault in Salaheddin.

"We managed to force the army to the neighbourhood of Hamdaniyeh," he said, referring to a district which is home to large numbers of government employees, many of them members of Assad's Alawite minority.

But state media reported that the rebels had suffered casualties in the fighting. "Our heroic forces inflicted losses on the armed terrorist groups in Salaheddin," the official SANA news agency said.

The Syrian Observatory for Human Rights reported heavy fighting on Sunday in the Bab al-Hadid, Zahraa, Arkub and Al-Hindrat Camp districts.

Observatory chief Rami Abdel Rahman said the fact that the initial ground assault on Salaheddin had been repulsed "does not necessarily mean a withdrawal as their strategy is to bombard... to cause an exodus, then launch an assault even more fierce."

Nationwide, violence killed 168 people on Saturday -- 94 civilians, 33 rebels and 41 soldiers, the Britain-based watchdog said.

Annan, the joint envoy on the Syrian conflict of the United Nations and the Arab League, issued a renewed call for a political settlement.

"The escalation of the military build-up in Aleppo and the surrounding area is further evidence of the need for the international community to come together to persuade the parties that only a political transition, leading to a political settlement, will resolve this crisis," he said.

The former UN chief brokered a peace plan that was supposed to begin with a ceasefire from April 12, but it never took hold.

The head of the opposition Syrian National Council, Abdel Basset Sayda, called on Arab governments to provide the rebels with heavy weapons.

"We want weapons that would stop tanks and jet fighters," he said after talks in Abu Dhabi.

He urged Arab "brothers and friends to support the Free (Syrian) Army" saying the support should be "qualitative because the rebels are fighting with old weapons."

But Russia said that governments such as Qatar and Saudi Arabia which advocate the arming of the rebels were responsible for the mounting death toll.

"Our Western partners... together with some of Syria's neighbours are essentially encouraging, supporting and directing an armed struggle against the regime," said Foreign Minister Sergei Lavrov.

"The price of this is yet more blood."

Lavrov said it was unrealistic to expect the Syrian government to do nothing when rebel fighters were taking over parts of major cities.

"We are persuading the government that they need to make some first gestures," said Lavrov.

"But when the armed opposition are occupying cities like Aleppo, where yet another tragedy is brewing as I understand... it is not realistic to expect that they will accept this."

Meanwhile, Syria's Foreign Minister Walid al-Muallem arrived in key ally Tehran on Sunday for previously unscheduled talks, Iranian state media reported, adding that he would discuss "developments in Syria" with officials.