Syrian rebels blew up a luxury hotel-turned-army base in the historic heart of Aleppo after tunnelling under the front line that divides the main northern city.

The Syrian Observatory for Human Rights said 14 troops and pro-regime militia were killed in the blast and its immediate aftermath.

"The explosion that was heard in Aleppo's Old City was caused by explosives planted by Islamist battalions in a tunnel beneath the Carlton hotel, which was occupied by regime troops," the Britain-based monitoring group said.

"Fourteen troops and pro-regime militiamen were killed in the explosion, and in fighting that broke out nearby immediately afterwards," its director Rami Abdel Rahman said.

However, state television gave no word on any casualties from the attack that levelled the famed Carlton Citadel Hotel just across the road from the city's UNESCO-listed Citadel.

A spokesman for Syria's biggest rebel alliance, the Islamic Front, told AFP via the internet from Aleppo that its fighters carried out the attack.

Video posted on the group's Twitter account showed a huge cloud of smoke and dust billowing into the sky after a massive explosion.

State television said the hotel, which opened not long before the uprising erupted in March 2011 in a renovated 19th Century hospital building, was completely flattened by the blast.

"Terrorists targeted the historic Carlton hotel in the Old City with a big explosion, destroying it completely and destroying several historic buildings nearby," the broadcaster said.

It was not the first time that rebels had tried to blow up the hotel, whose location and ultra-modern facilities made it one of the city's most sought after before the war.

They carried out a similar attempt in February but the building escaped major damage.