Iraqi forces recaptured from Islamic State the strategic town of Qayyara on Thursday, paving the way for the liberation of the extremist group's stronghold of Mosul, the Iraqi prime minister said.

"I congratulate the Iraqi people on liberating Qayyara and the areas around it ... which shortens the path towards recapturing Mosul and Nineveh province as a whole and rescuing its residents from the injustice of gangs," Haider Al-Abadi said in a statement on his official website.

Al-Abadi has repeatedly vowed to liberate Mosul, the country's second-largest city, from Islamic State.

Qayyara, 60 kilometres south of Mosul, is home to a major oil field. It is to become the launch pad for the retaking of Mosul, which has been under Islamic State control since mid-2014.

Abdul-Ghani al-Asadi, the commander of the anti-terrorism agency, earlier told dpa that Iraqi security forces managed to totally liberate Qayyara from Islamic State, killing about 250 militants, including leaders of different nationalities.

"Qayyara tribes also played a major role in liberating the town through cooperating with security forces and offering them intelligence about Daesh," he said, referring to Islamic State by its Arabic acronym.

Backed by US-led air forces, Iraqi troops launched a major offensive in the town on Tuesday.

The radical group has in recent months suffered several military setbacks and lost ground in Iraq and Syria, as well as Libya in North Africa.

Meanwhile, the parliament in Baghdad voted to sack Defence Minister Khaled al-Obeidi in the wake of a political storm caused by his accusations earlier this month that its speaker had been involved in corruption in the military.

Speaker Salim al-Jabouri was subsequently cleared by a judicial panel which said there was insufficient evidence against him.

Al-Obeidi was defiant after the vote, saying that he had tried his best to combat corruption and his sacking was "a victory for those who have brought Iraq to its present condition," according to a statement quoted by Alsumaria television.

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