* Helicopters strafe Aleppo
* Government declares victory in battle for Damascus
* Battle for Aleppo seen as potential turning point
By Erika Solomon
ALEPPO, Syria, July 29 The government of Bashar al-Assad declared victory on Sunday in a hard-fought battle for Syria's capital Damascus, and pounded rebels who control parts of its largest city Aleppo.
Assad's forces have struggled as never before to maintain their grip on the country over the past two weeks after a major rebel advance into the two largest cities and an explosion that killed four top security officials.
Government forces have succeeded in reimposing their grip on the capital after a punishing battle, but rebels are still in control of sections of Aleppo, clashing with reinforced army troops for several days.
"Today I tell you, Syria is stronger... In less than a week they were defeated (in Damascus) and the battle failed," Foreign Minister Walid Moualem said on a visit to Iran, Assad's main ally in a region where other neighbours have forsaken him.
"So they moved on to Aleppo and I assure you, their plots will fail."
Rebel fighters were clearly in control of parts of Aleppo, where Reuters journalists saw neighbourhoods dotted with Free Syrian Army checkpoints flying black and white Islamist banners.
Helicopter gunships hovered over the city shortly after dawn and the thud of artillery boomed across neighbourhoods.
Rebel fighters, patrolling opposition districts in flat-bed trucks flying green-white-and-black "independence" flags, said they were holding off Assad's forces in the south-western Aleppo district of Salaheddine, where clashes have gone on for days.
Opposition activists also reported fighting in other rebel-held districts of Aleppo, in what could herald the start of a decisive phase in the battle for Syria's commercial hub, after the army sent tank columns and troop reinforcements last week.
Cars entering one Aleppo district came under fire from snipers and a Reuters photographer saw three bodies lying in the street. Unable to move them to hospital for fear of shelling, residents had placed frozen water bottles on two of the corpses to slow their decomposition in the baking heat.
Other rebel-held areas visited by Reuters were empty of residents. Fighters were basing themselves in houses - some clearly abandoned in a hurry, with food still in the fridges.
A burnt out tank lay in the street, while nearby another one had been captured intact and covered in tarpaulin.
In a largely empty street, flanked by closed shops and run-down buildings, women clad in long black abaya cloaks walked with children next to walls daubed with rebel graffiti - "Freedom", "Free Syrian Army" and "Down with Bashar".
Rubbish lay uncollected. In one street families were packing vans full of mattresses in apparent preparation to flee.
Near the centre of town, most shops were shuttered, some with the word "Strike" painted over them. The only shop doing business was a bakery selling subsidised bread, where the queue stretched around the block. Burnt cars could be seen in many streets, some with the word "shabbiha" marked on them - a reference to pro-Assad militiamen.
U.N. Undersecretary-General for humanitarian affairs Valerie Amos said 200,000 people had fled the fighting in and around Aleppo in the last two days, and the violence across Syria made it hard for humanitarian agencies reach them.
"Many people have sought temporary shelter in schools and other public buildings in safer areas. They urgently need food, mattresses and blankets, hygiene supplies and drinking water."
Late on Sunday Syrian state television said soldiers were repelling "terrorists" in Salaheddine and had captured several of their leaders.
"Complete control of Salaheddine has been (won back) from those mercenary gunmen," an unidentified military officer told the television news, saying the gunmen included fighters from Saudi Arabia, Afghanistan, Turkey and Yemen. "In a few days safety and security will return to the city of Aleppo".
Reuters journalists in the city were not able to reach the district to verify whether rebels had been pushed out. The pro-opposition Syrian Observatory for Human rights said fighting continued in Salaheddine late on Sunday.
The leader of Syria's main political opposition group, the Syrian National Council, called for foreign allies to provide heavy weapons to fight Assad's "killing machine".
"The rebels are fighting with primitive weapons...We want weapons that we can stop tanks and planes with," SNC chief Abdelbasset Seida said in Abu Dhabi. He urged foreign allies to circumvent the divided U.N. Security Council and intervene.
"Our friends and allies will bear responsibility for what is happening in Aleppo if they do not move soon," he said, adding that talks would start on forming a transitional government.
Arab League head Nabil Elaraby said the battle in Aleppo amounted to "war crimes", and perpetrators would eventually be punished, Egypt's MENA state news agency reported.
The Arab League has suspended Syria and lined up with the West and Turkey against Assad. Assad's government blames Arab states, especially Saudi Arabia and Qatar, for the revolt.
Reuters reported on Friday that Saudi Arabia and Qatar had set up a base in southeastern Turkey to aid the rebels.
A Saudi Foreign Ministry spokesman declined on Sunday to comment directly but said Riyadh gave financial and humanitarian aid to the Syrian people. He also hinted at more direct support, saying countries should enable Syrians "to protect themselves at the very least, if the international community is not able to do so".
Assad's ruling structure draws strongly on his Alawite minority sect, an offshoot of Shi'ite Islam, while his opposition is drawn largely from the Sunni Muslim majority, backed by Sunni leaders who rule nearly all other Arab states.
That has raised fears that the 16-month-old conflict could spread across the wider Middle East, where a sectarian divide between Sunnis and Shi'ites has been at the root of violence in Iraq, Lebanon, Bahrain and elsewhere.
Shi'ite Iran demonstrated its firm support for Assad by hosting his foreign minister. At a joint news conference with Moualem, Iran's own Foreign Minister Ali Akbar Salehi rebuked the West and Arab states for holding the "illusion" that Assad could be easily replaced in a managed transition.
In Damascus, where Assad's forces have pushed back a rebel offensive since a deadly July 18 bomb attack on his inner circle, many residents have fled fighting in the outskirts for relative safety in the heart of the capital.
In the centre, shops open only between 9 am and 3 pm, food prices have soared and no one dares walk outside after dusk, even in the holy month of Ramadan when streets are normally packed late into the night with people breaking the fast.
"To begin with I was with the regime, for sure," said Ahmed, from one of the southern suburbs where the army, backed by helicopters and tanks, launched its counter-offensive.
"But now, no, the regime must go. Take what they want with them, but they must go."
The battle for Aleppo, a city of 2.5 million people, is a decisive test of the government's ability to retake its two main cities. It has committed huge military resources to the battle there after losing control of outlying rural areas and some border crossings with Turkey and Iraq.
The British-based Observatory said 26 people were killed in Aleppo on Saturday and 190 across Syria. It reported fighting in Deraa, Homs and Hama. There was no way to verify its figures.
The Aleppo fighting follows the July 18 bomb attack, which killed four top security officials including Assad's defence minister, intelligence chief and powerful brother-in-law.
Interior Minister Mohammad al-Shaar, who was wounded in the attack, told state media the assassination had only hardened the authorities' determination to crush the revolt.
"Before this cowardly explosion, we were all working flat out. But now we will exert 10 times the effort to pursue those who threaten the security of our country," Shaar said.