ADEN - Troops loyal to Yemen's president have captured the western entrance to the strategic city of Taiz, partially breaking a siege by Houthi fighters allied with Iran, medical and military sources said on Saturday.

At least 48 people have been killed in heavy clashes in Yemen's third biggest city, the medics and local fighters said, and at least 120 people have been wounded. Witnesses said there were bodies scattered in the streets.

Supporters of President Abd-Rabbu Mansour Hadi, backed by a Saudi-led Arab coalition, have been trying for months to lift the siege of the southwestern city and open up key supply routes.

The struggle is part of coalition efforts since March last year to roll back Houthi gains and restore Hadi, who is currently in Saudi Arabia, to power. The war has devastated the country, killed more than 6,000 people and displaced millions.

The reported capture of the western entrance to Taiz, where nearly half of the 250,000 residents had been trapped since May, was hailed by the government-run news agency as a major breakthrough. It said Hadi and his deputy, Khaled Bahah, had telephoned the local military commander to congratulate him on the victory.

Meanwhile, another news agency controlled by Houthis, said fighters from the group killed 27 Hadi supporters.

Bahah, who is also the prime minister, told a news conference in the southern port city of Aden that the Yemeni government was preparing an aid convoy to Taiz to leave soon but gave no further details.

Bahah told journalists that the government had prepared 1,000 men to take charge of security in Taiz immediately to avoid a repetition of the lawlessness and chaos that happened in Aden after government forces captured the city from the Houthis in July last year.

Aden, where the Yemeni government is currently based, has been gripped by bomb and gun attacks targeting senior government officials and security personnel since last year. The United Nations had accused the Houthis of obstructing the delivery of humanitarian supplies to civilians in Taiz, saying residents had been living under "virtual siege".

The Houthis and troops loyal to their ally, former President Ali Abdullah Saleh, remain entrenched in much of the northern half of Yemen, including the capital Sanaa. Islamist militants have exploited the chaos to widen their influence.

On Wednesday the Saudi-led coalition said it had exchanged prisoners with its Houthi opponents, and welcomed a pause in combat on the border. A delegation from the Houthi group is currently in Saudi Arabia, in what two officials said was an attempt to end the year-old war. Yemeni police clashed with Al-Qaeda fighters as pro-government forces pressed their offensive to break a rebel siege on third city Taez, security sources said.

In the internationally recognised government's temporary capital of Aden, fighting broke out in the Mansura residential district after security forces set up new checkpoints, they said. Dozens of gunmen in balaclavas carrying the Al-Qaeda flag deployed to push back police trying to enter the neighbourhood, witnesses said.

Jihadists from Al-Qaeda and the Islamic State group have taken advantage of the conflict between the Huthi insurgents and pro-government forces to reinforce their presence in the south, including the port city of Aden.

Meanwhile, pro-government forces on Saturday pressed their offensive aimed at breaking the rebels' months-long siege of the southwestern city of Taez, military sources said. Fighting raged north and east of the city, they said, a day after loyalists pushed the Iran-backed Huthis out of its western and southern suburbs.

Forces loyal to President Abedrabbo Mansour Hadi managed to "retake important positions" in a northern suburb where heavy clashes continued, one source said.

But retaking the eastern part will be more difficult, the source said, as this is held by the Republican Guard, an elite army unit loyal to former president and Huthi ally Ali Abdullah Saleh.

The rebels and their allies have been attacking residential neighbourhoods of Taez from this area, which includes an airport, an industrial zone and the headquarters of the special forces, the source added, without giving a death toll for the fighting.

Loyalists on Saturday morning pushed back rebels trying to retake the headquarters of the army's 35th brigade in the western suburbs, sources said. Loyalists last summer retook five southern provinces including Aden and have for months been fighting to win back Taez. Breaking the siege should allow for humanitarian and medical aid to reach about 200,000 besieged residents, Taez governor Ali al-Maamari said on Friday from exile in Saudi Arabia.

The capital Sanaa further north has been under rebel control since September 2014. US Secretary of State John Kerry on Saturday said that he and Saudi Foreign Minister Adel al-Jubeir had agreed to work towards a ceasefire in Yemen.

"We discussed Yemen, where we have agreed to work even more closely together in the next days to explore the possibilities of a political solution and we both agreed that it would be desirable to see if we can find a similar process that we did in Syria in Yemen to try to get a ceasefire," he said.

The United Nations has been pursuing efforts for peace talks, but UN envoy for Yemen Ismail Ould Cheikh Ahmed said last month that "deep divisions" were preventing progress. Saudi Arabia's ambassador to the United Nations, Abdallah al-Mouallimi, said this week that he hoped talks could resume by March 15.