Iraqi troops launched an offensive on Thursday to retake the last "Islamic State" (IS) stronghold in their country, the western towns of al-Qaim and Rawa in Anbar province.

"Daeshis have no option but to die or surrender," said Prime Minister Haider al-Abadi said, using Arabic shorthand for IS militants.

According to Iraqi media, the US-led air alliance was assisting in the assault up the Euphrates valley toward the two Sunni Arab towns. For years, al-Qaim has been a bastion of Sunni Arab insurgency.

Military sources said a key regional army base and an airbase had been found abandoned by the IS. Iraqi forces had also retaken half a dozen villages.

Last IS bastion

That left the jihadists confined to a small stretch of the valley linked to remnant territory in Syria where they also face Russian-backed Syrian government forces.

Ahead of the onslaught, thousands of Iraqis had fled the region to displacement camps near Ramadi, the capital of Anbar, said the Norwegian Refugee Council (NRC), which provides aid in the region.

Bitter fighting in recent months has already handed Baghdad several victories against IS, most importantly driving them from Mosul, Iraq's second-largest city, in July.

Last month, Iraqi troops liberated the town of Hawija, the group's last foothold in the country's north. In total, government fighters have retaken 90 percent of the vast swaths of its land, which IS seized in their 2014 sweep through Iraq and Syria.

Armed conflict with Kurds

However, the new offensive on al-Qaim and Rawa came as Baghdad seemed to be reigniting armed conflict with the country's semi-autonomous Kurdish region. On Thursday, Kurdish authorities said government soldiers had begun assaulting their forces in the disputed and oil-rich Nineveh province.

"They are advancing towards peshmerga positions," the regional government said.

That assault was close to the route of a strategic oil export pipeline sought to reestablish direct central Iraqi government oil exports via Turkey.

US urges focus on defeating IS

Since 2014, when IS swept through northern and western Iraq, Kurdish peshmerga fighters played an integral role in the fight against jihadists, with the US-led alliance often relying on their regional expertise.

As the Iraqi government has made strides against IS, it has also tried to tighten federal control over pro-independent Kurdish areas, forcing the Kurdish authorities to abandon its key source of funds, the rich oil fields of Kirkuk, in a massive blow to the region's self-sufficiency.

The top US general in Iraq, Lt. Gen. Paul Funk called on Thursday for an end to "Iraqis killing Iraqis, when we've got Daesh to kill out in the west."

Another US army spokesman, Ryan Dillon, said that fighting had "negatively impacted Coalition efforts to defeat ISIS [another acronym for IS], specifically the inability to move military equipment and supplies to our partners both in Iraq and Syria."

es, ipj/ng (AFP, AP, dpa)