Iraqi security forces and pro-government militias wrested control of large parts of the Tigris River town of Dhuluiya from Islamic State fighters on Monday, police and army sources said.
The assault, which began Sunday and ran into Monday, enabled militia fighters as well as Iraqi Army and federal police to break the militants' siege of the town 70 km (45 miles) north of Baghdad.
Iraq's Shiite-led government, backed by U.S.-led airstrikes, has been trying to push back the Islamic State group since it swept through mainly Sunni Muslim provinces of northern Iraq in June, meeting virtually no resistance.
"Iraqi security forces backed by volunteers (militias) are controlling central parts of Dhuluiya where the government offices are located," said Khalaf Hammad, a police chief from Dhuluiya. "Now Islamic State fighters are trapped in small areas in the town's northwest."
Islamic State fighters had occupied the town's northern half since June and surrounded the southern half of Dhuluiya where members of the Sunni al-Jubouri tribe had refused to swear allegiance to the militants.
"Since early morning we have been trapped inside homes. The only thing we can hear is the warplanes bombing and machine-gun barrages," said Bado Ahmed, a resident of Dhuluiya. "We are desperately waiting to be liberated from Islamic State."
Iraqi police said Iraqi helicopter and fighter planes conducted the airstrikes.
The Sunni militants had used neighboring villages to isolate not only the Jubouri tribesmen fighting Islamic State but also to attack the nearby Shiite town of Balad.
The new offensive, launched on Sunday, was meant to break the Islamic State group's grip around both Balad and Dhuluiya.
The rural areas north of Baghdad between Iraq's capital and Samarra, a shrine city for Shiites, are currently Islamic State strongholds.