Iraq's Joint Operations Command yesterday said police, counter-terrorism units and allied militias seized the Altun Kupri region, extending the central government's territory to within 50 kilometres of Arbil, the capital of the autonomous Kurdish region.
The two sides exchanged mortar rounds and automatic gunfire but Iraqi forces managed to "hoist the flag on the municipality building", an anonymous security source in Kirkuk city said.
Iraqi forces also said they had retaken the Ain Zalah and Batma oil fields, northwest of Mosul.
The fresh advances came after Iraq's central authorities snatched back control of a swathe of disputed territory from Kurdish forces in a largely bloodless operation launched at the weekend.
The government advances and Kurdish retreat have rewritten the volatile boundaries between the two sides and trashed Arbil's dreams of independence, which soared after a September 25 referendum held in defiance of Baghdad.
US oil giant Chevron said today it had "temporarily" suspended operations in the Kurdish autonomous region.
"We continue to monitor the situation in the Kurdistan Region of Iraq," a spokeswoman said.
"We look forward to resuming our operations as soon as conditions permit."
Iraq's forces have also snatched back areas of Nineveh and Diyala provinces, driving Kurdish forces from positions they seized in the chaos of the Islamic State group's 2014 rampage across northern Iraq and parts of neighbouring Syria.
Security in the Altun Kupri area had been ensured by Kurdish police forces loyal to regional president Massud Barzani ever since the US-led invasion of 2003.
In their bid to halt Iraqi forces, the peshmerga planted explosives that damaged a major bridge linking Kirkuk to their regional capital Arbil over the Little Zab river, according to a local security source.
Barzani, head of the Kurdistan Democratic Party (KDP), issued a statement overnight yesterday denouncing "the genocide attempt by the Iraqi government" and called on the international community to "put pressure on (world) governments to avoid more catastrophes for the Kurdish people".
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