Syria acknowledged for the first time on Monday that it had chemical and biological weapons and said it could use them if foreign countries intervened.
International pressure on President Bashar al-Assad has escalated dramatically in the last week, alongside a rebel offensive in the two biggest cities and a bomb attack which killed four members of his inner circle in Damascus.
Defying Arab foreign ministers who on Sunday offered Assad a "safe exit" if he stepped down, the Syrian leader has launched fierce counter-offensives, reflecting his determination to keep power as a 16-month uprising enters its most violent phase.
Foreign Ministry spokesman Jihad Makdissi said the army would not use chemical weapons to crush rebels but could use them against forces from outside the country.
"Any chemical or bacterial weapons will never be used ... during the crisis in Syria regardless of the developments," Makdissi said. "These weapons are stored and secured by Syrian military forces and under its direct supervision and will never be used unless Syria faces external aggression."
Damascus has not signed a 1992 international convention that bans the use, production or stockpiling of chemical weapons, but officials in the past had denied it had any stockpiles. Western countries expressed immediate alarm.
"Given the escalation of violence in Syria, and the regime's increasing attacks on their people, we remain very concerned about these weapons," White House spokesman Tommy Vietor said.
British Foreign Secretary William Hague said it was a "complete illusion" that Syria faced any external threat and it was unacceptable to say it might use chemical weapons in any circumstances.
German Foreign Minister Guido Westerwelle said it was "outrageous to threaten to use chemical weapons" and U.N. Secretary General Ban Ki-moon said he was very concerned Syria may be tempted to use unconventional weapons.
Western and countries and Israel have also expressed fears chemical weapons could fall into the hands of militant groups as Assad's authority erodes. Israel has publicly discussed military action to prevent Syrian chemical weapons or missiles from reaching Assad's Lebanese Shi'ite militant allies Hezbollah.
The Global Security website, which collects published intelligence reports and other data, says there are four suspected chemical weapons sites in Syria: north of Damascus, near Homs, in Hama and near the Mediterranean port of Latakia. Weapons it produces include the nerve agents VX, sarin and tabun, it said, without citing its sources.
Abdelbasset Seida, head of the Syrian National Council opposition group, said: "A regime that massacres children and rapes women could use these types of weapons.
"The technical infrastructure may not be suitable, but as I said, such a step could be expected from this murderous regime. The international community must prevent this," he told reporters after meeting Turkey's foreign minister in Ankara.
Arab League ministers meeting in Doha urged the opposition and the rebel Free Syrian Army to form a transitional government, Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani told a news conference.
Makdissi rejected the call for Assad to step down as a "flagrant intervention" in Syria's internal affairs. "We regret that the Arab League stooped to this immoral level," he said.
On Monday the army shelled rebel forces in the northern city of Aleppo and stormed the southern Damascus neighborhood of Nahr Aisha, breaking into shops and houses and burning some of them, activists said.
Video showed dozens of men in green army fatigues massing in the neighborhood, which looked completely abandoned. Men carrying machine guns and rocket-propelled grenade launchers knocked and then kicked down doors and climbed through windows.
Assad's forces have reasserted control over several Damascus areas since they seized back the central Midan district on Friday, 48 hours after a bomb attack killed four of Assad's closest security officials.
"The regime strategy is to continue to confront the opposition, this time with much broader military response," said Ayham Kamel, Middle East analyst at Eurasia Group consultancy.
"The expectation that the regime is out of firepower or collapsing right now is misplaced."
But Assad's forces have lost ground outside cities, ceding control of four border posts on the Turkish and Iraqi borders.
Rebels also seized an army infantry school in the town of Musalmiyeh, 16 km (10 miles) north of Aleppo, and captured several loyalist officers, while others defected, a senior military defector in Turkey and rebel sources inside Syria said.
Sky Television footage from the town of Azaz close to the border with Turkey showed rebel fighters parading through streets firing triumphantly after a prolonged battle with government forces. It also showed a burned-out tank and remains of what it said was a government intelligence headquarters.
In Aleppo, activists said thousands of residents fled the rebel-held districts of Al-Haideriya, Hanano and Sakhour after army shelling and clashes between rebels and government forces in which activists said three government tanks were destroyed.
"The regime army threatened the districts and said that if the Free Syrian Army doesn't leave they will bombard the area," said Aleppo-based activist who gave his name only as Tamam.
A video posted by activists showed families crammed into taxis, vans and the back of trucks trying to flee. Dozens of other families set out on foot, carrying plastic bags with their belongings. An activist said taxi drivers were charging $300, more than many Syrians' monthly wage, to take families out.
"This is a large scale hit and run battle. The whole point is to bleed the regime dry. It is a very long fight, and it will be especially long in Aleppo," said a spokesman from the Islamist rebel group the Battalions for the Free Men of Syria.
The fighting in Damascus, Aleppo and the eastern city of Deir al-Zor has been some of the fiercest yet and showed Assad's determination to avenge last Wednesday's bomb attack, the most spectacular blow in a 16-month-old uprising against four decades of rule by the Assad family.
Activists reported clashes on Monday in the Damascus districts of Qadam and Kafr Sousseh, but opposition and rebel sources say the guerrilla fighters in the capital may lack the supply lines to remain there for long and may have to make tactical withdrawals.
In the north-east district of Qaboun, where Assad's forces pushed fighters back in recent days, most streets were empty, said a resident reached by telephone who visited the area from another part of Damascus. A few people were returning to check on homes, some of which were destroyed.
"I came just to pick up some of my family's belongings, I am not returning for now," one woman told the visitor at her empty-looking four-storey building.
Groups of men were removing bodies from underneath the rubble of one building. "We have removed 25 bodies so far from this area, we are burying them quickly," one said.
The Syrian Observatory for Human Rights, which compiles reports from anti-Assad activists, said 1,261 people had been killed across Syria since last Sunday when fighting escalated in Damascus, including 299 members of government forces.
This made it by far the bloodiest week in an uprising activists say has claimed at least 18,000 lives. A total of 140 people were killed on Sunday, including 38 soldiers, the observatory said. The accounts and figures could not be verified independently; Syria restricts access by journalists.
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