News of the move to recapture Qaraqosh sparked jubilation among Christians who had fled the town, with many dancing and singing in the city of Arbil.
Launched on Monday, the long-awaited advance on Mosul was making quick progress but US President Barack Obama joined a chorus of warnings the battle for ISIS' last Iraqi stronghold would be tough.
Officials have said the retaking of Mosul - in Iraq's largest military operation in years - could take weeks or months and warned that the hundreds of thousands of civilians still in the city could be used as human shields.
Units from Iraq's elite counter-terrorism service (CTS), which has done the heavy lifting in most recent operations against ISIS, were poised to flush jihadists out of the town, officers said.
"We are surrounding Hamdaniya now," Lieutenant General Riyadh Tawfiq, commander of Iraq's ground forces, told AFP at the main staging base of Qayyarah, referring to the district that includes Qaraqosh.
"There are some pockets (of resistance), some clashes, they send car bombs - but it will not help them," he said.
Displaced Christians held early celebrations last night in Arbil, the capital of the autonomous region of Kurdistan, where they fled after IS seized the town.
"Today is a happy moment. There is no doubt our land will be liberated and we thank God, Jesus Christ and the Virgin Mary," said Hazem Djedjou Cardomi, a journalist among the crowd.
Qaraqosh was the largest of many Christian towns and villages seized by the jihadists who swept across the Nineveh Plain east of Mosul in August 2014.
The mass exodus it sparked displaced a large proportion of Iraq's already dwindling Christian minority, sending most into the neighbouring Kurdish region.
Three days into the operation, Iraqi forces were closing in on Mosul from several directions, including the south where federal troops and police have been battling through IS defences and retaking villages as they work their way up the Tigris Valley.
Today, Iraqi forces reached the village of Bajwaniyah, about 30 kilometres south of Mosul.
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