The offensive to seize back Mosul from Islamic State is going faster than planned, Iraq's prime minister has said, as Iraqi and Kurdish forces launched a new military operation to clear villages on the city's outskirts.

Howitzer and mortar fire started at dawn, hitting a group of villages held by Islamic State about 10-20 km (6-12 miles) from Mosul, while helicopters flew overhead, according to Reuters reporters at two frontline locations north and east of Mosul.

To the sound of machine gun fire and explosions, dozens of black Humvees of the elite Counter Terrorism Service (CTS), mounted with machine guns, headed toward Bartella, an abandoned Christian village just east of Mosul.

Militants were using suicide car-bombs, roadside bombs and snipers to resist the attack and were pounding surrounding areas with mortars, a CTS commander said.

Hours later, the head of Iraq's Special Forces, Lieutenant General Talib Shaghati, told reporters at a command centre near the front line that troops had surrounded Bartella and entered the center of the village. Two soldiers were hurt and none killed, and they had killed at least 15 militants, he said.

"After Bartella is Mosul, God willing."

A cloud of black smoke wreathed some frontline villages, probably caused by oil fires, a tactic the militants use to escape air surveillance.

Iraqi state TV later quoted a CTS spokesman as saying about 80 insurgents were killed in fighting in Bartella and 11 suicide car-bombs destroyed.

A US service member also died on Thursday from wounds sustained in an improvised explosive device blast in northern Iraq, the US-led military coalition said in a statement.

Speaking on the condition of anonymity, a US defence official said the incident took place near Mosul. Roughly 5,000 US forces are in Iraq. More than 100 of them are embedded with Iraqi and Kurdish Peshmerga forces involved with the Mosul offensive, advising commanders and helping them ensure coalition air power hits the right targets, officials say.

The fighting around Mosul has also forced 5,640 people to flee their homes in the last three days, mostly in the past 24 hours, the International Organization for Migration said on Thursday.

More quickly than we thought

Prime Minister Haidar al-Abadi, addressing anti-Islamic state coalition allies meeting in Paris by a video link, said: "The forces are pushing toward the town more quickly than we thought and more quickly than we had programmed."

Islamic State denied that government forces had advanced. Under the headline "The crusade on Nineveh gets a lousy start," the group's weekly online magazine Al-Nabaa said it repelled all assaults on all fronts, killing dozens in ambushes and suicide attacks and destroying dozens of vehicles including tanks.

The US-led coalition that includes France, Italy, Britain, Canada and other Western nations is providing air and ground support to the forces that are closing in on the city in an operation that began on Monday.

Mosul is the last big stronghold held by Islamic State in Iraq and around five times the size of any other city the group has held. The push to capture it is expected to become the biggest battle fought in Iraq since the 2003 US-led invasion.

The United Nations says Mosul could require the biggest humanitarian relief operation in the world, with worst-case scenario forecasts of up to a million people being uprooted by the battle.

About 1.5 million residents are still believed to be inside the city, and Islamic State has a history of using civilians as human shields. French Foreign Minister Jean-Marc Ayrault said controls were being put in place to check jihadists were not trying to insert themselves among those fleeing Mosul.

Bombs, bunkers and tunnels

On the northern front, Kurdish peshmerga shot down a small drone that had flown over from the Islamic State lines. It was not clear if the drone, one to two metres wide, was carrying explosives or being used for reconnaissance.

"There have been times when they dropped explosives," said Halgurd Hasan, one of the Kurdish fighters deployed in a position overlooking the plain north of Mosul.

Ali Awni, a Kurdish officer, kept a handheld radio receiver open on a frequency used by Islamic State. "They are giving targets for their mortars," he said.

So far, advancing Kurdish troops have moved through villages outside the city, finding abandoned houses rigged with explosives and underground bunkers. In some cases fighters from Islamic State appear to have fled without putting up a fight.

"We did not face resistance from Daesh. They are retreating to Mosul and to Syria. They gave no resistance," peshmerga soldier Ahmed Midhat Abdullah told Reuters in the village of Nawaran, north of Mosul, where a Kurdish column of armored vehicles was advancing in the dusty desert terrain.

Islamic State swept into Mosul and other parts of northern Iraq in 2014 and has used extreme violence to administer a self-proclaimed caliphate there and in parts of neighboring Syria.

"The objectives are to clear a number of nearby villages and secure control of strategic areas to further restrict ISIL's movements," the Kurdish general military command said in a statement announcing the launch of Thursday's operations.

Shi'ite militia

The area around Mosul is one of the most ethnically and religiously diverse parts of Iraq, and Western countries backing the assault are concerned that communities feel safe as the government forces advance, to avoid revenge attacks or ethnic and sectarian bloodletting as fighters are driven out.

Western allies have tried to limit the role of Shi'ite militia fighters known as the Popular Mobilization Forces, which human rights groups say have carried out killings and kidnappings of Sunnis in other areas freed from Islamic State.

After the Paris meeting, Iraqi Foreign Minister Ibrahim al-Jaafari offered reassurance: "In answer to those who criticise the PMF for behaving badly, this is not true... They are part of the Iraqi forces and will be disbanded afterwards."

Prime Minister Abadi said the Mosul advance demonstrated that Iraqis from all groups could fight in common cause, noting that it was the first time in 25 years that troops from the Baghdad government had entered territory controlled by the Kurdish region to fight alongside the peshmerga.

"Our war today in Mosul is an Iraqi war conducted by Iraqis for Iraqis and for the defense of Iraq's territory," he said. "Full Iraqi unity is shining through and more than ever showing the unity to vanquish terrorism."

US President Barack Obama hopes to bolster his legacy by seizing back as much territory as he can from Islamic State before he leaves office in January.

Islamic State "will be defeated in Mosul", Obama said on Tuesday, expecting the fight to be difficult.

Iraqi officials and residents of Mosul say Islamic State is preventing people from leaving the city, in effect using them as shields to complicate air strikes and the ground progress of attacking forces.