Kurdish fighters have taken control of the strategically important town of Sinjar in northern Iraq, after taking it from Islamic State.

Associated Press journalists reported seeing the fighters raise a Kurdish flag and fire off celebratory gunfire in the town on Friday morning.

Kurdish militia fighters, known as Peshmerga, launched a major offensive to retake the town and cut a key highway on Thursday.

US-led coalition airstrikes supported the offensive, dubbed Operation Free Sinjar.

"ISIL defeated and on the run," the Kurdistan regional security council said in a tweet, using an acronym for Islamic State.

It said the Peshmerga had secured a Sinjar silo, cement factory, hospital and several other public buildings.

Kurdish fighters have been attempting to sever IS's primary line of communication between Raqqa in Syria and Mosul in Iraq.

The aim is to stop terrorists from being able to channel equipment and fighters into Iraq.