* Western, Arab states formally recognise opposition bloc
* Western powers reluctant to supply weapons to rebels
* Insurgents close in on Damascus, explosion rocks capital
* US: Assad's forces use Scud missiles for first time
By Samia Nakhoul and Khaled Yacoub Oweis
MARRAKECH, Morocco, Dec 12 (Reuters) - Syrian President Bashar al-Assad's forces have fired Scud-style ballistic missiles against rebels in recent days, U.S. and NATO officials said on Wednesday, in what U.S. officials described as an escalation in the 20-month civil war.
The United States, European powers and Arab states bestowed their official blessing on Syria's newly-formed opposition coalition on Wednesday, despite increasing signs of Western unease at the rise of militant Islamists in the rebel ranks.
Rebels battled Assad's troops on the outskirts of his Damascus power base. Their advances in the past two weeks have prompted their international allies to talk of the 20-month-old conflict finally entering a decisive phase.
In Damascus, a massive car bomb and two other explosions hit the main gate of the Interior Ministry. Lebanon's al-Manar television, which supports Assad's Hezbollah allies, said four people had been killed.
"Allied intelligence, surveillance and reconnaissance assets have detected the launch of a number of unguided, short-range ballistic missiles inside Syria this week," said a NATO official in Brussels. "Trajectory and distance travelled indicate they were Scud-type missiles."
A U.S. official, speaking on condition of anonymity, confirmed the use of Scuds. U.S. officials said they were not aware of any previous uses of the missiles.
It was not immediately clear why Assad's forces would deploy Scuds, which can have a range of up to a few hundred km and are best-known internationally from the 1991 Gulf War when Iraqi leader Saddam Hussein fired them at Israel.
The Soviet-designed missiles are unguided and inaccurate, and are not usually seen as a weapon of choice for the sort of internal anti-guerrilla war that the government is waging against small, mobile rebel bands.
Assad's forces have in the past relied on artillery, helicopters and attack jets, all of which are much more useful in close urban combat. However, the lightly armed rebels are increasingly obtaining better weapons to fight back, including the ability to shoot down aircraft.
Last week NATO decided to deploy U.S., German and Dutch batteries of Patriot air defence missiles along the Turkish-Syrian border, saying its main worry was the prospect of Syrian missiles being fired across the frontier.
That decision means hundreds of U.S. and European troops being sent to the border for the first time since the war began 20 months ago. Syria and Russia called it a pretext for the Western alliance to become drawn into the war.
FRIENDS OF SYRIA
Western countries at a "Friends of Syria" meeting in Marrakech, Morocco rallied around a new opposition National Coalition that was formed last month and is led by a moderate Islamist cleric, Mouaz Alkhatib.
U.S. President Barack Obama recognised the coalition on Tuesday as Syria's legitimate representatives, joining France, Britain, Turkey and Gulf Arab states. Alkhatib was given an invitation on Wednesday to visit the United States.
But Washington and its allies also remain wary of Sunni Islamist fighters among the rebels, some of whom they say are connected to al Qaeda. The United States designated one powerful rebel group, the Jabhat al-Nusra brigade, as a terrorist organisation, a decision Alkhatib said should be reversed.
The Marrakech gathering brought together more than 100 countries, led by Western and Arab nations opposed to Assad, but excluding Russia, China and Iran, which have backed Assad or blocked efforts to tighten international pressure on him.
"Participants acknowledge the National Coalition as the legitimate representative of the Syrian people and the umbrella organisation under which the Syrian opposition are gathering," said a declaration after the meeting.
"Bashar al-Assad has lost legitimacy and should stand aside to allow a sustainable political transition," the text said.
Referring to Western reports suggesting Assad might resort to chemical or biological weapons, the text said "any use of chemical weapons in Syria would be abhorrent and that this would draw a serious response from the international community".
Syria, which has not signed a treaty banning chemical arms, says it would never use such weapons against its own people and accuses the West of stoking such fears to justify intervention.
The Marrakech text made no commitment to arm the insurgents, and France said it was not ready to supply weapons.
"For now we have decided not to move on this," French Foreign Minister Laurent Fabius told reporters in Morocco. "We shall see in the coming months."
A Western diplomat at the meeting said Western powers did not rule out arming rebel units in the future, but want assurances about who would get the weapons.
"No option is ruled out. But there are big issues about the legality of intervening in a civil war. Any support to any group depends on the command control and the discipline on the ground," the diplomat said on condition of anonymity.
The Syrian state news agency SANA said Obama's recognition of the political opposition, which coincided with Washington's classification of Jabhat al-Nusra as a terrorist organisation, "proves American hypocrisy".
Russia also criticised the U.S. recognition, saying it ran counter to an agreement to seek political transition. Foreign Minister Sergei Lavrov said that it appeared the United States was betting on "armed victory" of Assad's opponents.
The rise of Jabhat al-Nusra to prominence has clearly alarmed the United States, which is worried about Assad being replaced by radicals linked to al Qaeda.
Jabhat al-Nusra recruits Islamist fighters from around the Muslim world. Its precise numbers are not clear but its Syrian and foreign guerrillas are powerful in the northern Syrian cities of Aleppo and Idlib. They have used suicide attacks to target checkpoints and now take the lead in attacks on army bases in northern Syria.
Alkhatib, the opposition coalition leader, said Washington should reconsider its designation of the group as terrorists.
"The decision to consider a party that is fighting the regime as a terrorist party needs to be reviewed," he said.
"We might disagree with some parties and their ideas and their political and ideological vision. But we affirm that all the guns of the rebels are aimed at overthrowing the tyrannical criminal regime."
The West blames the Syrian government and allied Alawite militias for most of the 40,000 deaths in the 20-month conflict against mainly Sunni Muslim rebels. Civilians from both sects have been victims of atrocities.
Activists say as many as 200 Alawites were either injured or killed on Tuesday by rampaging gunmen in Aqrab, a central Syrian village. Details of the incident were impossible to verify.
Fighting is moving closer to Assad's residence in the centre of Damascus. Early on Wednesday government forces fired artillery and rockets at southwestern suburbs of the capital adjacent to the Mezzeh military airport, activists said.
A resident reported sirens and shooting after a "huge explosion" in Kafar Souseh, location of the Interior Ministry, in an area contested by rebels and forces loyal to Assad.
SANA said on Wednesday that "terrorists" had also detonated two bombs in the Damascus district of Jaramana, killing one person and wounding five.
The rebels now hold a near continuous arc of territory from the east to the southwest of the capital. With conditions deteriorating, Damascus residents face power and food crises.