Security forces backed by paramilitary units launched a dawn assault on a besieged IS-held pocket around the northern town of Hawija, just days after attacking the jihadists' only other foothold in the country.
The territory still held by IS has been dwindling fast since its defeat in Iraq's second city Mosul in July, with stronghold after stronghold coming under assault on both sides of the border with Syria.
Iraqi Prime Minister Haider al-Abadi predicted that the assault on the Hawija region would swiftly bring a new victory against the crumbling jihadists.
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.
After the defeat of IS in Mosul and the recapture of adjacent areas, Hawija and neighbouring towns form the last enclave still held by IS in Iraq apart from a section of the Euphrates Valley downstream from the border with Syria.
"Greetings to all of our forces, who are waging several battles of liberation at the same time and who are winning victory after victory and this will be another, with the help of God," he said.
An AFP correspondent heard heavy shelling around the IS- held town of Sharqat where Iraqi forces have been massing in recent days.
The US-led coalition fighting IS hailed the new offensive by the Iraqi security forces against the jihadist group, also known as ISIS.
"Daesh is losing ground and failing in every battle. Soon ISIS will have no sanctuary in Iraq," said coalition spokesman Colonel Ryan Dillon.
Humanitarian organisations expressed concern for the fate of civilians caught up in the offensive.
"The 85,000 civilians still in and around Hawija, including around 40,000 children, now face a terrifying time as they worry about getting caught up in the fighting or being hit by an air strike," said International Rescue Committee acting country director Jason Kajer.
The Hawija area was the second after Mosul to be captured by IS in its lightning offensive through the Sunni Arab heartland north and west of Baghdad in 2014.
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