Iraqi forces and Shi'ite militia fighters recaptured most of the country's largest oil refinery from Islamic State militants on Thursday, security officials said.

The report could not be independently confirmed because it is too dangerous for journalists to enter the battle zone around the refinery near the town of Baiji, about 190 km north of Baghdad.

The refinery is a focal point in efforts to contain Islamic State and has changed hands several times since the Sunni Islamist militants swept through northern Iraq last year. Islamic State controls one-third of the territory of the country.

The Iraqi army and volunteer militia fighters, who are mostly Shi'ite Muslims, launched an assault on Wednesday to retake Baiji.

A spokesman for Iraq's counterterrorism forces told Reuters that government forces and militias were in control of the vast energy complex and eliminating pockets of resistance.

"Counterterrorism forces with volunteers are holding a tight grip over all the gates of the refinery and its facilities," Sabah Al-Numani said.

Iraqi federal police forces also seized most parts of the town of Baiji, Baiji's mayor Mohammed Mahmoud told Reuters.

"I can confirm to you that our forces won the battle of the refinery and for Baiji town. We managed to control almost all parts of the town and now we are surrounding some Daesh snipers entrenched in some buildings," he said.

Daesh is a derogatory Arabic acronym for Islamic State, which is also known as ISIS or ISIL.

Islamic State insurgents suffered a major defeat in April when Iraqi troops and Shi'ite paramilitaries routed them from the city of Tikrit.

The insurgents struck back with gains in Baiji and the western province of Anbar, the other major battleground in the campaign against Islamic State.

Video footage seen by Reuters showed Hadi Al-Amiri, the leader of the Badr Brigade militia and a leading Shi'ite politician, inside Baiji refinery unfurling a map and briefing a group of Shiite fighters on military operations.  - Reuters