"Shells and rockets have been hitting the town since three a.m. (midnight GMT) at a rate of one a minute. Rastan has been destroyed," an FSA member in the town who declined to be named told Reuters by satellite phone.
He said among those killed was Ahmad Ayoub, an FSA commander whose fighters were battling the army forces which he said were made up of elite units and members of Military Intelligence.
Syria restricts media access, making it difficult to verify accounts of the unrest. But other activists also reported heavy shelling overnight on Rastan.
The town, 25 kms (15 miles) north of the city of Homs, is a major recruiting ground for Sunni conscripts who provide most of manpower in the military, which is dominated by officers from Assad's minority Alawite sect.
Sunni officers from Rastan began defecting after security forces shot dead dozens of demonstrators in the town and arrested many of its notables several months after the revolt against Assad erupted in March 2010.
The area was scene of the first serious armed confrontations between army defectors and loyalist forces last year. Assad's forces regained control of the city several times but it has kept slipping back into rebel hands.
The town lies about 180 km (110 miles) north of Damascus, among farmland and wheat fields on the Orontes River and on the northern highway leading to Aleppo.
Its strategic location and the terrain has helped deserters from disparate units mount raids against army buses and roadblocks manned by Military Intelligence and pro-Assad militia, opposition activists said.