While the U.S. and its European and Gulf allies are concerned about the rising prominence of Islamists among the rebels, the merger is unlikely to prompt a shift in the international support. Late last year, Washington declared that Jabhat al-Nusra had ties to al-Qaida and designated it a terrorist organization.
To try to counter the rising influence of Jabhat al-Nusra and other Islamic extremists in the civil war, the U.S. and its allies have boosted their support for rebel factions deemed to be more moderate.
On the political front, they helped created the opposition umbrella group, the Syrian National Coalition, in the hope that it will serve as the united face of those trying to unseat Assad and administer much of the territory in northern Syria that rebels have managed to pry away from regime forces in the past year.
The U.S. and other countries also have stepped up covert support for rebels on the ground by helping to coordinate shipments of new weapons and training rebels in Jordan, officials say. Those receiving training are mainly secular Sunni Muslim tribesmen from central and southern Syria who once served in the army and police.
The force is seen as a counterbalance to the Islamic militant groups chief among them Jabhat al-Nusra that have proven to be among the most effective of the myriad rebel factions fighting Assad's forces, officials say.
The merger was announced by the leader of the Islamic State of Iraq, Abu Bakr al-Baghdadi, in a 21-minute audio message posted on militant websites late Monday. A website linked to Jabhat al-Nusra known as al-Muhajir al-Islami the Islamic emigrant confirmed the merger.
Together, the groups will now be known as the Islamic State in Iraq and the Levant, al-Baghdadi said. The Levant is the traditional name referring to the region from southern Turkey to Egypt on the eastern Mediterranean.
"It is time to announce to the Levantine people and the whole world that Jabhat al-Nusra is merely an extension and part of the Islamic State of Iraq," he said.
He said the Iraqi group was providing half of its budget to the conflict in Syria, and that Jabhat al-Nusra would not have a separate leader but instead be led by the "people of Syria themselves" implying that he would be in charge in both countries.
The announcement comes two days after the leader of al-Qaida, Ayman al-Zawahiri, urged Islamic fighters in Syria to unite in their efforts to oust Assad.
Jabhat al-Nusra, which has welcomed militants from across the Muslim world into its ranks, has made little secret of its links across the Iraqi border, but until now it has not officially declared itself to be part of al-Qaida.
The Syrian group, which wants to oust Assad and replace his regime with an Islamic state, first emerged in a video posted online in January 2012. Since then, it has demonstrated its prowess and ruthlessness on the battlefield.
It has claimed responsibility for many of the deadliest suicide bombings against Syrian government institutions and military facilities. The group's success helped fuel a surge in its popularity among rebel fighters, although it has also emerged as a source of friction with more moderate and secular brigades in Syria.
The group also has tried to provide basic services in the parts of northern Syria under rebel control, including security and food to civilians struggling to survive.
Bilal Saab, director of the Institute for Near East and Gulf Military Analysis, North America, said the merger will make Jabhat al-Nusra an even more formidable force in Syria.
"I think you're going to have a pooling of resources, a more massive influx of fighters coming from Iraq into Syria. It will help them better position themselves in the period after Assad. It will certainly better help them defeat the Syrian regime more quickly," Saab said.
"It does matter for them that they're getting more materiel and more people and more expertise, especially Iraqi veterans who have really been vetted on the battlefield and who have fought coalition forces since 2003," he added.
Al-Qaida in Iraq arose after the 2003 U.S. led-invasion of Iraq, and fought a bloody insurgency against American troops and Iraqi government forces. Generally, the group has not operated beyond Iraq's borders.
The union with al-Qaida also poses risks for Jabhat al-Nusra.
Coming under the banner of a non-Syrian group could tarnish the group's image in the eyes of some rebels and Syrian civilians, particularly if the group tries to impose its strict Islamic beliefs.
"It has the potential to backfire, and help marginalize the group from other fighting factions and from the civilian population," said Elizabeth O'Bagy of the Institute for the Study of War.
She said by email that the merger could prompt a growing number of Syrians to view Jabhat al-Nusra's actions "as an outside imposition that is detrimental to Syria's future."
For now, it is unlikely to undermine Jabhat al-Nusra's standing in the eyes of the broader rebel movement, which desperately needs the group's unmatched skills on the battlefield to defeat a government war machine that enjoys far superior firepower with its tanks, helicopter gunships, fighter jets and artillery.
Still, for rebels who favor a civil state in post-Assad Syria, the presence of jihadi fighters presents a dilemma: It helps their immediate goal of getting rid of Assad, but it hurts them politically to have a group designated as a terrorist organization on their side.
"Their thinking is ... 'let's deal with the problem right now of deposing the regime, and then take care of these rogue, radical elements later when we have international support,' " Saab said. "For now, they need them. When everything is over, there's going to be a huge fight over basically all of Syria."
Among those most concerned by the merger is Iraq, whose Shiite-led government has been trying for years to snuff out an al-Qaida-led Sunni insurgency.
In a column published Tuesday in the Washington Post, Iraqi Prime Minister Nouri al-Maliki warned that a Syria controlled by al-Qaida and its affiliates "would be more dangerous to both our countries than anything we've seen up to now." He added that such a scenario "grows more likely by the day."
A top Iraqi intelligence official told The Associated Press in Baghdad that his organization has always known that "al-Qaida in Iraq is directing Jabhat al-Nusra." He said the groups announced their union because of "political, logistical and geographical circumstance." The official, who spoke on condition of anonymity because he was not authorized to brief the media, said Iraqi authorities will take "strict security measures to strike them."
Iraqi officials say the groups are sharing three military training compounds, logistics, intelligence and weapons, and are growing in strength around the Syria-Iraq border.
One of the most dramatic attacks by the group and at the time the clearest indication of cross-border cooperation with al-Qaida in Iraq came on March 4, when 51 Syrian soldiers were killed in a well-coordinated ambush. The Syrians had crossed into Iraq to seek refuge following clashes with rebels on the Syrian side of the border.