The Houthi militants retook the district of Al-Shuraijah between Yemen's provinces of Taiz and Lahj, sources the popular resistance said on Friday.
The district is not far from the country's largest military base of Anad.
Two days ago, the pro-government forces withdrew from the town of Al-Rahidah, adjacent to Al-Shuraijah.
The popular resistance, whose fighters are backing the government forces, said it was a tactical withdrawal.
Months ago, the government forces with support from the Saudi-led coalition drove the Houthi militants out of southern regions.
Lately, they launched an offensive to retake Taiz.
On Friday, the offensive continued as local sources said battles raged all the day in midtown and on other war fronts.
The government forces have took over military camps and key positions in western parts of Taiz that the Houthis are seeking to retake now.
Sources in the Dhubab town said battles erupted Friday after the Houthis attempted to retake the Amri military camp.
There were no reports of casualties.
Battles between the government forces and the Houthis are continuing in the provinces of Baidha, Sanaa, Ibb and Jawf.
In addition, the coalition conducted fresh airstrikes against Houthi camps and weapons depots in several cities including the capital Sanaa.