* Heavy fighting in Latakia province
* Syria bans 17 diplomats
* Peace plan in tatters (Adds background, Saudi comment)
By Mariam Karouny and Erika Solomon
BEIRUT, June 5 (Reuters) - Syria's government banned 17 Western diplomats and its helicopter gunships pounded rebels in a coastal province on Tuesday as President Bashar al-Assad defied international pressure to halt his campaign to crush the uprising against his rule.
The declaration that ambassadors from the United States, Canada, Turkey and several European countries were unwelcome was retaliation for the expulsion of Syrian envoys from their capitals last week, following the massacre of more than 100 civilians by suspected Assad loyalists.
On the battlefront, rebels fought with government forces backed by helicopter gunships in the heaviest clashes in coastal Latakia province since the revolt broke out 15 months ago.
It was the second day of combat since the rebels declared they would no longer abide by an internationally brokered ceasefire, saying that the government had continued the repression in defiance of United Nations peace observers.
Rebel fighters said eight of their comrades were killed, while the pro-opposition Syrian Observatory for Human Rights said 15 to 20 soldiers were killed.
Activists also reported heavy fire by government forces on the city of Homs, a focal point of the uprising that endured a bloody siege for weeks earlier this year.
The latest developments emphasised the precarious state of a peace plan brokered by Nobel Peace laureate Kofi Annan, who has shuttled between Damascus and other capitals on behalf of the United Nations and Arab League.
Foreign governments are still clinging to the plan as the only option for finding a political solution and preventing a wider and bloodier conflict. But with the failure of the ceasefire and Assad's intransigence, it is all but in tatters.
In Jeddah, Saudi Arabia's Foreign Minister Prince Saud al-Faisal said Gulf Arab states had begun to lose hope that the peace plan would find a solution.
The comments are significant as Sunni-ruled Gulf countries have led international efforts to oust Assad, who is allied to Shi'ite Iran, and have hinted in the past they were willing to arm the rebels.
Nevertheless, Russia and China, Assad's principle defenders on the diplomatic front, said on Tuesday that Annan's efforts should not be abandoned.
Russian President Vladimir Putin and his Chinese counterpart Hu Jintao, meeting in Beijing, urged international support for the plan despite calls from Arab and Western states for a tougher response to the bloodshed.
The two countries, permanent members of the U.N. Security Council with the power to veto resolutions, have stymied efforts by Western powers to condemn or call for the removal of Assad.
The United Nations says Assad's forces have killed more than 10,000 people since the uprising against his family's four-decade rule of Syria broke out in March 2011.
Assad says he is fighting to save the country from foreign-backed "terrorists" and will carry out his own reform programme. The government says more than 2,700 soldiers or security personnel have been killed by opposition forces.
Opposition fighters appear to have stepped up assassinations of government loyalists in recent months - two army officers were assassinated on Tuesday in northeastern Deir al-Zor province, according to state news agency SANA.
RESPECT
Syria's Foreign Ministry said the move to declare the 17 Western diplomats personae non grata was a response to the coordinated expulsions of Syrian envoys by 10 countries last week over the massacre at Houla.
But it was still open to re-establishing ties on a basis of "principles of equality and mutual respect," a ministry statement said.
"We waited for so long for the other side to correct their policies and offer the needed support to Annan's plan and the observers' mission. But we regret that we had to take this measure because they do not want this mission to succeed," Deputy Foreign Minister Faisal Makdad said in Damascus.
The diplomats, most of them ambassadors, included envoys from the United States, Canada, Britain, France and Turkey. Most had already left Syria.
Turkey is a former Assad ally and now a strong opponent which has provided haven to army defectors, rebels and refugees.
A Turkish official said almost 2,700 Syrians had fled to Turkey during the first five days of June, mostly into Hatay, a southeastern province that juts into Syrian territory. That brought the total of Syrians registered in camps to about 2,700.
Villagers close to the border told Reuters that in the past few days Syrian soldiers had torched forested areas to destroy cover for armed insurgents suspected of operating there.
Videos uploaded by rebels showed clouds of smoke rising from mountainous areas close to Turkey.
The clashes in Latakia province were a rare surge of violence in a province outside the usual trail of bloodshed.
The head of the British-based Syrian Observatory, Rami Abdelrahman, said the fighting was in mostly Sunni areas in and around the city of Haffeh. Ambulances were seen rushing through the city carrying government casualties.
Latakia province is home to several towns inhabited by members of the minority Alawite sect, a Shi'ite offshoot to which Assad himself belongs. (Additional reporting by Oliver Holmes and Dominic Evans in Beirut, Can Sezer in Turkey; Writing by Angus MacSwan; Editing by Jon Boyle)