Hundreds of IS militants stormed Heet, some 160 km west of Iraq's capital Baghdad, in the early hours of the day and seized most of the town's districts after fierce clashes with Iraqi security forces and allied Sunni tribesmen, the source told Xinhua on condition of anonymity.
The militants started the attacks from several directions after they pounded the town with heavy mortar fire, the source said.
The attackers used suicide car bombers to strike the security centres and main government buildings, the source said, adding that the battles were still under way.
The security situation began to drastically deteriorate in Iraq since June 10, when bloody clashes broke out between Iraqi security forces and hundreds of IS militants, who took control of the country's northern city of Mosul.
Later, the IS seized swathes of territory after Iraqi security forces abandoned their posts in Nineveh and other predominantly Sunni provinces.