Citing current and former US officials, the Wall Street Journal reported that the USA military was preparing to withdraw its forces from Syria by the end of April and a significant portion of them would be out by the middle of March.
Major-General Christopher Ghika, the coalition's deputy commander, on Thursday described the size of the last ISIS pocket as "now less than 1 per cent of the original caliphate".
The besieged ISIL enclave centered around Baghouz on the eastern bank of the Euphrates River represents the jihadist group's last territorial foothold in the part of Syria where the USA -backed forces have been fighting it.
While ISIS will soon no longer have fixed positions anywhere in Iraq or Syria, its surviving fighters have reverted to guerilla warfare and remain a potent force.
Trump announced in December he would be pulling all 2,000 US troops out of Syria, saying the battle against ISIS there was nearly won.
Four years ago, IS controlled territory the size of Britain and administered millions of people.
After capturing Raqqa, the SDF advanced southwards into Deir al-Zor province, attacking the jihadists in territory on the eastern bank of the Euphrates River.
Donald Cerrone claims he has interim title shot against Conor McGregor
Dana White wants to make the speculated UFC matchup between Conor McGregor and Donald Cerrone a reality. But he has previously said he wants to book a rematch against Khabib Nurmagomedov later in the year.
An SDF statement said the offensive was focused on the village of Baghouz.
Islamic State leader Abu Bakr al-Baghdadi was reportedly attacked in a village near Hajin by some of the terrorist organisation's foreign fighters in an apparent coup attempt, The Guardian reported, citing anonymous intelligence sources.
The jihadists maintain sleeper cells along the border with Iraq, as well as in cities they once ruled, and have carried out periodic hit-and-run attacks.
The Britain-based war monitor Syrian Observatory for Human Rights said SDF fighters were advancing "cautiously" due to mines planted by Isis gunmen.
He said that when the SDF detects movement from IS fighters, they bomb them, but added: "There have not been any major changes".
Bali said there could be up to 600 IS fighters still inside the pocket, majority foreigners.
According to the Observatory, more than 37,000 civilians, including dozens of IS militants, have fled the last IS-held pocket to areas controlled by the SDF in the eastern Euphrates region since last December.