Iraqi forces achieved the first goal of a new offensive against the Islamic State group on just its second day Friday, capturing the northern town of Sharqat, a military source said.

"The town of Sharqat is in our hands. There are still some villages around it that need to be liberated" from IS, the source said.

Residents danced in the streets earlier to celebrate as government troops and paramilitaries entered the town centre and tore down the black flags of the jihadists who had ruled it with an iron fist for more than three years.

AFP correspondents saw little damage in the town which had been rocked by fighting, and the bodies of two jihadists in the back of a pickup.

Sharqat was the first goal of a major offensive launched on Thursday to recapture an IS-held enclave centred on the insurgent bastion of Hawija, the next goal of the operation,

Hawija is some 30 kilometres (20 miles) to the southeast and one of the last pockets still controlled by the jihadists in Iraq.

IS still holds the towns of Anna, Rawa and Al-Qaim in the western desert near the border with Syria.

After the defeat of IS in second city Mosul in July and the recapture of adjacent areas, the Hawija area represents the last enclave still held by IS in Iraq apart from a section of the Euphrates Valley near the border with Syria.

The mainly Sunni Arab enclave, which was bypassed by government forces in their advance north to Mosul last year, has been a bastion of insurgency ever since the first year of the US-led occupation in 2003.

The territory still held by IS in the "caliphate" straddling Iraq and Syria it proclaimed in 2014 has dwindled, with stronghold after stronghold coming under assault on both sides of the border.

Iraq soldiers, police and paramilitaries launched earlier this week an offensive to retake Anna, Rawa and Al-Qaim.

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