Washington: Iraqi forces and militia fighters have rolled back the Islamic State group in the northern town of Baiji and at a nearby oil refinery but it is too soon to declare victory in either battle, the Pentagon said Monday.

The US military's account of fighting around Baiji confirmed claims on Sunday from the Iraqi army that security forces had advanced against the IS jihadists and entered the city center. 

"We are prepared to say that friendly forces have begun moving in to the town of Baiji and are methodically beginning to root out the enemy who has entrenched themselves in that town," Pentagon spokesman Colonel Steven Warren told reporters.

But it was too early to say the town was "liberated," Warren said.

There were also signs of hard-won progress at the oil refinery just outside the town, the largest in the country.

Iraqi troops trying to defend the refinery had become encircled by IS jihadists and have been forced to rely on supplies being delivered by aircraft.

But Iraqi security forces have succeeded in opening up a supply route to the troops, according to Warren.

"Over the course of the last several days, friendly forces have opened up a line of communication . . . into the Baiji oil refinery and now are able to flow equipment and personnel to reinforce the forces that have been dug in at Baiji for several months," he said.

The fight for the vast refinery, which once produced 300,000 barrels per day of refined products, is still "hotly contested."

Most of the Iraqi troops operating at the refinery were drawn from the Baghdad government army and police while "a majority" of the force fighting in Baiji town were from Shiite and other militia units under Baghdad's authority, Warren said.

US-led coalition warplanes carried out three air raids near Baiji on Sunday, striking IS group positions and seven vehicles, according to a release from the milliary command overseeing the air war.

The Iraqi government regained control of Baiji -- located on the road to the IS group's bastion of Mosul -- last year, but later was forced to retreat again.

The IS group swept across Iraq last June and overran the country's second city Mosul in less than 24 hours, before seizing much of the country's Sunni Arab heartland.

IS has been driven out of some areas north of Baghdad, but still holds much of western Iraq.