The Arab League suspended its monitoring mission in Syria because of worsening violence, a move Damascus said was an attempt to encourage foreign intervention as it struggles to quell a 10-month revolt against President Bashar al-Assad.

The Arab League took the decision Saturday days after calling on Assad to step down and make way for a government of national unity. It will take an Arab peace plan to the U.N. Security Council next week.

Instability is increasing inside Syria. Saturday, the army launched an offensive against rebels who seized three Damascus suburbs this week. Activists said at least 12 people had been killed and 30 injured, mostly by anti-aircraft fire and mortar rounds. The report could not be independently verified.

Given the critical deterioration of the situation in Syria and the continued use of violence ... it has been decided to immediately stop the work of the Arab League's mission to Syria... Secretary-General Nabil Elaraby said in a statement.

Arab League foreign ministers are expected to discuss early next month the possibility of withdrawing monitors completely, a League official said.

Syria TV cited a government official as saying Syria was surprised by the decision, which would put pressure on (Security Council) deliberations with the aim of calling for foreign intervention and encouraging armed groups to increase violence.

France, however, which has been leading calls for stronger international action on Syria, said the Arab League decision highlighted the need to act.

France vigorously condemns the dramatic escalation of violence in Syria, which has led the Arab League to suspend its observers' mission in Syria, the foreign ministry said in a statement.

Dozens of Syrian civilians have been killed in the past days by the savage repression taken by the Syrian regime, notably by massive military operations against opponents' neighbourhoods in several cities. Those responsible for these barbarous acts must answer to their crimes.

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For graphic on Arab League http://link.reuters.com/pev65s

For graphic on Syria toll http://link.reuters.com/xav85s

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The Arab League mission was sent to observe Syria's implementation of a League peace plan, which failed to end the fighting. The mission was further undermined when Gulf states withdrew their monitors last week, saying the team could not stop the violence - which Assad blames on foreign-backed militants.

FIGHTING, DEFECTIONS NEAR CAPITAL

In the three rebel-held suburbs of Damascus, activists said they believed the army was trying to prevent insurgents from building a stronghold close to the centre of government.

The Damascus insurgents were emboldened by a string of reports of army desertions, and activists said one group of deserters had brought with them their three tanks.

Activists told Reuters by telephone that rebels who control the towns of Saqba, Kafr Batna and Jisreen were exchanging fire with soldiers who were shooting back from tanks and had used anti-aircraft guns and mortars.

A video uploaded by activists, purported to be from a rebel-held Damascus suburb, showed smoke rising from behind a mosque and heavy gunfire erupting in the background as residents shouted Allahu Akbar (God is greatest).

It was not possible to verify the video or many of the details from activists, as media access to such locations is restricted in Syria.

The rebel FSA agreed a truce last week for government forces to withdraw from rebel-held Zabadani, 30 minutes' drive from Damascus. It said the army had had to pull back because of the large number of desertions from its ranks.

Elsewhere, activists said they were still recovering bodies from the killings of Sunni Muslims in a neighbourhood of the flashpoint city Homs, which they blamed on pro-Assad militiamen belonging to the president's minority Alawite sect.

The UK-based Syrian Observatory for Human Rights said the death count had risen to 47.

The United Nations said in December that more than 5,000 people had been killed in the wave of protests. Syria says more than 2,000 security force members have been killed by militants.

Friday, the Security Council discussed a European-Arab draft U.N. Security Council resolution aimed at halting the bloodshed in Syria. Britain and France said they hoped to put the draft resolution to a vote next week.

Russia joined China in vetoing a previous Western draft resolution in October, and has said it wants a Syrian-led political process, not an Arab League-imposed outcome of a political process that has not yet taken place or Libyan-style regime change. [ID:nL2E8CRNWS]

(Additional reporting by Shaimaa Fayed and Edmund Blair in Cairo, Khaled Yacoub Oweis in Amman, Steve Gutterman in Moscow, and Louis Charbonneau at the United Nations; editing by Tim Pearce)