ADEN (AFP, Reuters) - Yemeni rebels stormed President Abedrabbo Mansour Hadi's palace in his former southern stronghold Aden Thursday, dealing a symbolic blow to the self-exiled leader despite a week of Saudi-led air strikes.

The advance made by the Iran-backed Shi'ite Houthi fighters came as dozens of unidentified troops landed by sea in Aden in an apparent last-ditch effort by a Saudi-led coalition to shore up a foothold in the southern Yemeni port city.

The soldiers arrived in a single vessel a few hours after the Iran-allied Houthis and their supporters swept into the heart of Aden despite an eight-day air campaign led by Riyadh to stem their advances.

The southern port city has been the last major holdout of fighters loyal to the Saudi-backed President Hadi.

It was not immediately possible to verify the nationality of the troops, but the Saudi-led coalition says it is in control of the waters around Aden. If confirmed as a coalition move, it would be the first reported deployment of ground forces since Saudi Arabia launched the campaign a week ago.

The advance by Houthi rebels deep into Aden, the last bastion of Hadi supporters, appeared to further douse prospects of his returning any time soon from neighbouring Saudi Arabia.

"Dozens of Houthi militia and their allies arrived in armoured troop carriers and entered Al-Maashiq presidential palace," said a senior security official who witnessed their advance.

Heavy clashes, including tank shelling, erupted afterwards between the rebels and their opponents inside the compound, a member of the pro-Hadi militia told AFP.

At least 44 people - including 18 civilians - were reported dead on Thursday in fierce fighting between opponents and supporters of Hadi in the southern port city.

"There are bodies and wounded in the streets and nobody dares to approach," said Khaled al-Shaie, a resident in the central neighbourhood of Crater.

The Houthis, allied with army units loyal to former president Ali Abdullah Saleh, have seized swathes of the country including the capital Sanaa.

Hadi fled to Aden from the capital after the Houthis seized power in February, and the palace came under fire from warplanes twice during his stay.

He went into hiding last week as the rebels bore down on what was his last stronghold, later surfacing in the Saudi capital as Riyadh launched an air war on the rebels.

Saudi Arabia announced Thursday its first casualties since launching the offensive, with one soldier killed and 10 more wounded by gunfire from across the Yemeni border.

AL-QAEDA ESCAPE

In the coastal city of Mukalla in southeast Yemen, Al-Qaeda militants stormed a Hadramawt provincial prison and freed more than 300 inmates, including one of their leaders, a security official said.

Khalid Batarfi had been held for more than four years, the official told AFP. Two guards and five inmates were killed in clashes, the official said.

Batarfi is among Al-Qaeda in the Arabian Peninsula's (AQAP) top regional commanders, known for his leading role in a 2011-2012 battle with government troops during which extremists seized large parts of the south and east.

Al-Qaeda militants also clashed Thursday with troops guarding the local administration complex in Mukalla, a branch of the central bank and the police headquarters, the official said.

Fighting also broke out at the harbour and around a presidential palace in the city, security officials said. The militants met no resistance as they seized the local radio headquarters, the officials said, adding that broadcasting was interrupted.

Yemen has descended further into chaos since a Saudi-led coalition launched Operation Decisive Storm a week ago against positions held by Shiite rebels and their allies across the deeply tribal country. Observers have warned that Yemen-based AQAP, classified by the United States as the network's deadliest franchise, could exploit the unrest to strengthen its presence in the country.

Before the latest chaos erupted, Yemen had been a key US ally in the fight against Al-Qaeda, allowing Washington to carry out a longstanding drone war on its territory.

The coalition says its week-old air war is showing success. The operation "has excellently achieved planned goals at all levels - air, ground, and sea," coalition spokesman Brigadier General Ahmed Assiri said.

But rights groups have expressed alarm at civilian casualties, including in an air strike on a camp for displaced people and the bombing of a dairy. Several dozen people were killed in both incidents.

"All sides in Yemen's conflict need to do what they can to avoid harming civilians," said Joe Stork of New York-based Human Rights Watch.

In the southern province of Dhaleh, Houthis killed 40 rebel fighters who tried to desert after their commander urged them to lay down their arms because of the intense air strikes, military sources said.

Diplomats in New York said Gulf countries were locked in tough negotiations with Russia on a UN draft resolution to impose an arms embargo and sanctions on the rebels.