* Rebels battling Assad's forces in area where plane hit
* Erdogan vows to retaliate for airspace violations
* Syria condemns "blatant aggression" (Adds Assad cousin killed in border fighting)
By Daren Butler
ISTANBUL, March 23 (Reuters) - Turkish armed forces shot down a Syrian plane on Sunday that Ankara said had crossed into its air space in an area where Syrian rebels have been battling President Bashar al-Assad's forces for control of a border crossing.
"A Syrian plane violated our airspace," Prime Minister Tayyip Erdogan told an election rally in northwest Turkey. "Our F-16s took off and hit this plane. Why? Because if you violate my airspace, our slap after this will be hard."
Syria condemned what it called a "blatant aggression" and said the jet was pursuing rebel fighters inside Syria. It said the pilot had managed to eject before the plane crashed.
The Turkish general staff said one of its control centres detected two Syrian MIG-23s around 1 pm (1100 GMT) and warned them four times after they came close to the Turkish border.
One plane entered Turkish airspace at Yayladagi, east of the Kasab border crossing, it said. A Turkish F-16 fired a rocket at the Syrian jet and it crashed around 1,200 metres (1,300 yards) inside Syrian territory.
Amateur video released by rebel fighters showed smoke rising from wooded hills in the border area where they said the plane had come down.
The rebels have been fighting since Friday for control of the Kasab crossing, one of several counter-offensives since they retreated this week from a crusader castle near the Lebanese frontier and town on a vital cross-border supply route.
State television said Hilal al-Assad, a cousin of the president and local leader of the National Defence Force militia which has been supporting the army's efforts to crush the rebellion, was killed near Kasab on Sunday.
Assad's soldiers, backed by Iran and Shi'ite forces from Iraq and Lebanon's Hezbollah, have been pushing rebels back in the centre of the country around Damascus and Homs, but have only a minimal presence in most of north and eastern Syria.
"UNPRECEDENTED" TURKISH INTERVENTION
The incident occurred six months after Turkish warplanes shot down a Syrian helicopter which crossed into Turkish airspace in the same border area.
Once a close ally of Assad, Erdogan became a fierce critic of the president's military response to Syria's uprising and has sheltered and supported rebels battling to overthrow him.
Authorities in Damascus say this week's Islamist rebel offensive around the Kasab border crossing marked a new escalation, accusing Turkey of firing tank and artillery shells into Syria to provide cover for the fighters.
A source at Syria's foreign ministry called Turkey's actions "unprecedented and unjustified", state news agency SANA said.
More than 140,000 people have been killed in Syria's conflict, while 2.5 million refugees have fled to neighbouring countries and millions more need humanitarian aid.
Assad's forces have already lost control of most border crossings with Turkey during the three-year civil war but had held on to Kasab, gateway to the coastal province of Latakia that has remained an Assad stronghold.
The Syrian Observatory for Human Rights monitoring group said heavy clashes continued for a third day around Kasab, where rebels have seized control of the border crossing but Assad's forces, who still control the nearby Kasab village, have been fighting back, supported by air power.
The British-based anti-Assad Observatory said rebels also launched another attack in Latakia on Sunday in the village of Solas, about 25 km (15 miles) south of Kasab.
They also fired two rockets into the coastal city of Latakia, the main hub for operations to ship out Syria's chemical weapons for destruction under a deal reached with the United States and Russia. There were no immediate reports of casualties.
In the northern city of Aleppo, rebels said they had captured a former police station on the edge of the city's ancient citadel, as well as installations in the Layramoun district and a nearby hill overlooking the main road into Aleppo from the northwest. (Additional reporting by Dominic Evans in Beirut; Editing by Tom Heneghan)