BEIRUT -- An Islamist rebel group that the United States has listed as a terrorist organization has taken the lead in fighting in Damascus, according to residents who’ve recently fled the violence there.

The reports that the Nusra Front, which the Obama administration last month declared to be an affiliate of al Qaida in Iraq, is at the forefront of the fighting in Syria's capital underscores the deepening sectarianism inside Syria that many analysts feel is likely to thwart new U.N. efforts to promote a negotiated settlement to the conflict.

Residents of the southern Damascus neighborhood of Yarmouk said that fighters from Nusra, whose name in Arabic is Jabhat al Nusra, were at the forefront of a battle that has driven hundreds of thousands of people from the district since Nusra launched its offensive about two weeks ago. Other Islamist rebel groups also are playing a role in the combat, the residents said.

Supporters of rebels fighting to topple the government of President Bashar Assad say that groups like Nusra make up only a small minority of the anti-Assad fighting force. But Nusra increasingly is leading the fighting across Syria, a development that raises the prospects of sectarian bloodletting as rebels move from areas where the population, like the rebels, is predominantly Sunni Muslim to cities and towns where the residents are Shiite Muslim or Alawites, the Shiite sect to which Assad and Syria’s governing elite belong.

In the northern town of Zarzour, located strategically on a road between the Turkish border and rebel-held areas to the south, rebels burned a Shiite mosque last month, an event with echoes of the sectarian conflict that continues to cause violence in Iraq.

Damascus residents who’ve fled to Beirut also said the government increasingly has deployed militias to offset losses by the Syrian military, another sign of how the conflict has forced Syrians to choose sides or flee.

Pro-democracy activists from Yarmouk who fled to Lebanon last week said that they no longer saw space inside Syria for nonviolent action.

Ahmed, a 22-year-old anti-government activist from Yarmouk who fled to Lebanon on Friday, said he had decided to seek a visa for a third country, rather than wait for a chance to return to his homeland. He asked that his last name be withheld out of security concerns.

“I am a peaceful activist,” he said. “I can’t carry a weapon.”

Still, he defended Nusra’s role in the fighting, saying his experience made him have confidence that any government that replaced Assad would not be governed by Nusra’s rejection of elections and call for a state based on Islamic law.

“I wouldn’t want to live in an Islamic state,” Ahmed said. “But I don’t believe that is the future of Syria – people would demonstrate against that, too.”

Fighting for control of Yarmouk has gone on since last summer, when rebels first launched a major offensive in Damascus and Aleppo, the country’s largest city.

The Nusra offensive two weeks ago, however, added new momentum to the battle, driving Yamouk residents to flee and triggering fierce government bombardment in response.

Ahmed said he had dealt with Nusra fighters on a daily basis in Yarmouk and viewed them as more professional than other rebel groups, who’ve been accused of widespread looting in some parts of the country where fuel and food are in short supply.