"The IS is in the city of Palmyra for the first time after losing it to the Syrian army, whose forces are collapsing in the city," Xinhua quoted the Syrian Observatory for Human Rights as saying.
The Britain-based watchdog group said IS succeeded to advance and reach the vicinity of the Palmyra hospital in the northwestern outskirts of the city, after capturing the Amiriyeh suburb in the northern part.
The IS terrorists also captured the Tar mountain, close to the Palmyra Citadel, west of the city, in tandem with shelling the citadel with mortar shells and heavy artillery.
The Observatory said intense battles are still raging between the IS terrorists and the Syrian government forces in the city.
The IS started its offensive on Palmyra on Thursday, after bringing in hundreds of fighters for taking the city, according to the Observatory.
The Syrian army are fighting to restore the positions it had lost in Palmyra as a result of the IS attack.
The Syrian army captured Palmyra on March 27, 2016, a year after losing the city to the IS.