Yemen's Houthi fighters and their allies seized a central Aden district on Thursday even as the Saudi-led coalition continued air strikes to try to stem advances by the Iran-allied Shi'ite group.

Hours after the Houthis took over Aden's central Crater neighbourhood, unidentified armed men arrived by sea in an area of the port city which the Iran-allied Shi'ite fighters have yet to reach.

A Yemeni official denied that ground troops had landed in Aden and a port official said they were armed guards who had disembarked from a Chinese ship trying to bring aid or evacuate civilians.

Meanwhile, the Saudi ambassador to the United States said the kingdom does not have "formal" troops on the ground in Aden, Yemen, but sending them remains a possibility.

"The issue of using ground troops is always something that is on the table," Saudi Ambassador Adel Al-Jubeir said at an event in Washington.

Aden, the southern port city, has been the last major holdout of fighters loyal to the Saudi-backed President Abd-Rabbu Mansour Hadi, who fled Aden a week ago and has watched from Riyadh as the vestiges of his authority have crumbled.

The Houthis, who took over the capital Sanaa six months ago in alliance with supporters of former president Ali Abdullah Saleh, turned on Aden last month and have kept up their advances.

Residents of Aden's central Crater district said Houthi fighters and their allies were in control of the neighbourhood by midday on Thursday, deploying tanks and foot patrols through its otherwise empty streets after heavy fighting in the morning.

It was the first time fighting on the ground had reached so deeply into central Aden. Crater is home to the local branch of Yemen's central bank and many commercial businesses.

"People are afraid and terrified by the bombardment," one resident, Farouq Abdu, told Reuters by telephone from Crater. "No one is on the streets - it's like a curfew".

Another resident said Houthi snipers had deployed on a mountain overlooking Crater and were firing on the streets below. Several houses were on fire after being struck by rockets, and messages relayed on loudspeakers urged residents to move out to safer parts of the city, he said.

Hadi's rump government has appealed for international ground forces to halt the Houthis.

A diplomat in Riyadh said Aden had come to symbolise Hadi's fading authority, meaning that Saudi Arabia could not afford to allow it to fall completely under Houthi control. But he said Riyadh's air campaign was so far geared more towards a slow war of attrition than an effective defence of the southern city.

"Saleh and the Houthis are keeping the pressure on Aden, which is the weak point in Saudi strategy," he said. "I think the Saudis would put ground forces into Aden to recapture it if it falls. It is a red line for them." - Reuters