"Iraqi forces are preparing for a major attack in Fallujah," the official told AFP.
Special forces had already conducted operations in the city, and the army was deployed around it to allow residents to leave, the official said.
Then security forces would launch "the attack to crush the terrorists".
Parts of Ramadi and Fallujah, west of Baghdad, have been held by militants for days, harkening back to the years after the 2003 US-led invasion when both cities were insurgent strongholds.
US Secretary of State John Kerry said today that Washington was ready to help Baghdad in its battle against the militants, but added that it was "their fight".
Kerry said the United States was "very, very concerned" about the resurgence of ISIL but was not contemplating any return of US ground troops, after their withdrawal in December 2011.
