AMMAN (Reuters) - U.S.-backed Syrian forces made new territorial gains against Islamic State on Saturday, moving closer to another of its major strongholds in northern Syria, according to the Syrian Observatory for Human Rights.

The Observatory said the Syria Democratic Forces (SDF), bringing together Kurdish and Arab fighters, were now almost 17 km from the city of al-Bab, an Islamic State stronghold north east of Aleppo.

The SDF on Friday cut off the last route into the encircled town of Manbij from al-Bab after over a week of advances around that area, allowing it to lay siege to the large town from all directions, the monitor said.

The Observatory said nearly 160 Islamic State fighters had died in battles with the SDF around Manbij and more than 20 SDF fighters had been killed.

The SDF, supported by U.S.-led air strikes and American special forces, launched an advance earlier this month to seize Islamic State's last territory on the Syria-Turkey border and cut the self-declared caliphate off from the world.

The SDF has said it is holding back from an immediate assault to enter Manbij out of concern for civilians.

(Reporting by Suleiman Al-Khalidi; Editing by Mark Potter)