The Islamic State of Iraq and the Levant group took full control on Monday of a town in the western province of Al Anbar as thousands of troops try to expel its fighters from Mosul, a city 700 kilometres north, Al Jazeera has learned.
ISIL, also known as ISIS, fighters stormed Rutba following territorial losses in Mosul, the group's last major urban bastion in Iraq.
Seeking to distract attention, ISIL has attempted to hit back with attacks elsewhere in Iraq.
In Rutba, they seized the mayor's office, captured and executed at least five people - civilians and policemen - and controlled neighbourhoods on Monday, army commanders said.
Rutba is home to more than 20,000 people.
"Rutba is a very strategic town. It is seen as a significant victory," said Al Jazeera's Imran Khan, reporting from Erbil. "The fact that they lost this town is very significant."
The town of Rutba controls the road from Baghdad to Jordan and Syria.
Battle for Mosul
The campaign to retake Mosul comes after months of planning and involves more than 25,000 Iraqi troops, Kurdish forces, Sunni tribal fighters and state-sanctioned Shia militias. It is expected to take weeks, if not months, to drive ISIL out of Iraq's second largest city, which is still home to more than a million people.
ISIL has suffered a series of setbacks over the past year.
"What allowed ISIL to gain large traction in Iraq was the breakdown of the political order in Baghdad," former Iraqi ambassador to the UN Feisal Istrabadi told Al Jazeera. "Leaderships throughout the country will have to make the necessary compromises and political bargains to dry out the swamp that allows ISIL to thrive."
ISIL's capture of Rutba came as Iraqi forces fought on Monday into two villages near Mosul as the offensive to retake Mosul entered its second week.
Several countries are involved in the battle to reclaim the key city, including Turkey which on Sunday confirmed its first attempted shelling of ISIL positions near Bashiqa, a key town near Mosul, at the request of Peshmerga forces.
"The Peshmerga forces have now reached the town of Bashiqa but are not inside it yet," said Al Jazeera's Hoda Abdel-Hamid, reporting from Erbil. "It may take a few days. They [Peshmerga] suspect that there are a few ISIL suicide bombers inside."
Turkey's moves on Sunday raised tensions between Ankara and Baghdad. Relations have been strained after Turkey sent hundreds of troops to the Bashiqa region to train anti-ISIL fighters.
Baghdad labels the move a violation of its sovereignty and demands Turkish withdrawal, a call which Ankara ignores.
Elsewhere, the Iraqi Federal Police, a military-style force, pushed into a small village in the Shura district south of Mosul, where they fired a large anti-aircraft gun and rocket-propelled grenades as they battled ISIL fighters.
They later appeared to have secured the village, a cluster of squat homes on a desert plain, and handed out water and other aid to civilians.
The US-led coalition said it had carried out six air strikes near Mosul on Sunday, destroying 19 fighting positions and 17 vehicles, as well as rocket and mortar launchers, artillery and tunnels.
Source: Al Jazeera News And Agencies