Fighters from the Islamic State have killed at least 23 Iraqi soldiers and members of allied Shia fighters in a flashpoint area in the south of Baghdad, Iraqi sources said.

Islamic State fighters, firing salvos of mortar rounds, began attacking the town of Jurf al-Sakhr late on Friday, killing 11 soldiers and 12 members of the Shia Asaib Ahl al-Haq fighters, an officer and army medic told the AFP news agency on Saturday.

Another seven soldiers were wounded during a subsequent government operation against fighters in Jurf al-Sakhr, Al-Hamya and Latifiya, the sources said.

Meanwhile, Kurdish troops, called Peshmergas, fought off an attack by Islamic State fighters on an oil facility and a dam near the Iraqi city of Mosul, Kurdish sources told AFP.

The armed group, which controls the northern city, "attacked a Peshmerga post in Zumar [on Friday] and a fierce battle erupted," a Kurdish official told AFP.

He said 14 Peshmerga fighters were killed, a toll confirmed by a senior officer in the Kurdish force, adding that Kurdish forces killed "around 100" fighters and captured 38 in a battle that lasted several hours.

Two others were killed Saturday in fighting that erupted in the nearby Kasak area close to a border crossing with Syria, a senior Peshmerga source told AFP.

Islamic State fighters, who had already been running large areas in neighbouring Syria, launched a blistering offensive on June 9 that saw them capture Mosul, Iraq's second city, and move into much of the country's Sunni heartland.

The armed group fights both against the government forces and Peshmarge forces of the Kurdish government that controls the country’s north.

Source: Agencies