The announcement came after three security sources told AFP a wanted man holed up in his Iraqi home killed at least 12 members of his extended family, many of them children, before committing suicide Thursday.

The tragedy took place in Al-Rashayed village in the central province of Babylon, just south of Baghdad, when special forces and intelligence officers prepared to raid the home of the suspect "accused of terrorism", one security source told AFP.

Security forces "pursued two individuals accused of terrorism," the security force statement said.

"After surrounding him he opened fire indiscriminately at the (security) forces."

State news agency INA reported a mission had been undertaken to arrest "wanted people hiding in a house, the owner of which opened fire on the security forces".

"Upon entering the house which the owner refused to surrender, the unit found that all members of his family, numbering 20 civilians, had died," the agency reported.

An intelligence source told AFP that the suspect was part of the Islamic State-group.

Iraq proclaimed victory against IS in 2017 after the group over-ran large swathes of the country's northern and western regions in 2014.

A low-level IS insurgency, particularly in the north, continues to disrupt efforts to restore stability to Iraq, which is scarred by years of warfare and unrest.

The south and centre of Iraq are also important drug trafficking routes, which security forces have intensified their efforts against.

Drugs have also been sold and used widely in Iraq for many years.