Iraqi forces backed by the United States-led coalition retook on Friday the last town in the country that was held by the militant Islamic State (IS) group, more than three years after the militants stormed nearly a third of Iraq's territory, the Defence Ministry said.

At dawn, military units and local tribal fighters pushed into the western neighbourhoods of Rawah in western Anbar province, and after just five hours of fighting they retook the town, according to Brigadier Gen Yahya Rasool, the ministry's spokesman.

Iraq's Prime Minister Haider al-Abadi congratulated his forces on retaking Rawah.

In a statement released on Friday afternoon, Al-Abadi said Iraqi forces liberated Rawah in record time and were continuing operations to retake control of Iraq's western desert and the border area with Syria.

Rawah, 275 kilometres northwest of Baghdad, lies along the Euphrates River Valley near the border town of Qaim that Iraqi forces retook from IS earlier this month.

US-led coalition forces supported the operations to retake Rawah and Qaim with intelligence, airstrikes and advisers, coalition spokesman Ryan Dillon said.

IS blitzed across Iraq's north and west in the summer of 2014, capturing Iraq's second-largest city of Mosul and advancing to the edges of the Iraqi capital, Baghdad.

Later that year the US began a campaign of airstrikes against the militants that fuelled Iraqi territorial gains, allowing the military to retake Mosul in July this year.

All that now remains of IS-held Iraq are patches of rural territory in the country's vast western desert along the border with Syria.

IS has steadily been losing ground across the border in Syria as well where its so-called “caliphate” has basically crumbled with the loss of the city of Raqqa, the former IS capital, which fell to the US-backed Syrian Democratic Forces in October.

Both the US and Russia have embedded special forces with their respective partners and are supporting their advances with airstrikes. Russia backs the Syrian government forces of President Bashar Assad.

The last urban areas controlled by the militants in Syria are parts of the border town of Boukamal and a patch of territory near the capital, Damascus, and in central Hama province.

Syrian government forces, backed by Russian troops and Iranian-backed militias, originally pushed IS out of Boukamal earlier this month, but the militants retook a large part of the town, mostly its northern neighborhoods days later. Since then, IS has repelled government forces trying to push back into the town.

Meanwhile, US-backed Kurdish-led forces are also approaching Boukamal from the eastern side of the Euphrates.

Despite IS' significant territorial losses, the group's media arm remains intact, allowing it to still recruit supporters and inspire new attacks.

Iraqi and American officials say IS militants are expected to continue carrying out insurgent-style attacks in Syria, Iraq and beyond.