"The operation in Khazir includes up to 4,000 peshmerga in three fronts to clear nearby IS-occupied villages," the general command of the peshmerga said in a statement.
It said the operation was coordinated with Iraqi federal forces moving from the south and had received extensive air support from the US-led coalition battling IS in Iraq and Syria.
Peshmerga commanders said the push was the third phase of an effort that started months ago to retake villages in the Nineveh plain that were captured by IS in 2014 and used to be inhabited by members of the Christian and Kakai minorities.
An AFP correspondent embedded with the fighters said coalition air strikes on IS targets ahead of advancing peshmerga vehicles sent large clouds of smoke and dust billowing into the sky.
Qaraqosh was the largest Christian town in Iraq before IS overran it and forced its entire population to flee, mostly into the neighbouring Kurdistan Regional Government region.
Footage of the operation aired on Kurdish channel Rudaw showed peshmerga fighters shooting and stopping a suicide car bomb coming towards them.
The latest offensive by the peshmerga is part of a broader operation to retake Mosul announced by Iraqi Prime Minister Haider al-Abadi early today.
The much-anticipated announcement comes more than two years after IS seized Iraq's second city.
Mosul is the extremist group's last major stronghold in Iraq and its recapture would shatter IS's claim that it is still running a "caliphate" straddling Iraq and Syria.
Abadi stressed in his televised address that only army and police forces would enter Mosul itself when advancing forces eventually reach the city's boundaries.
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