The battle broke out when dozens of IS militants stormed the village of Sultan Abdullah (in northern Iraq) between the towns of Gwer and Qaiyara, south of the city of Mosul, which is some 400 km north of the Iraqi capital of Baghdad, a security source told Xinhua on the condition of anonymity.
The IS militants seized control of the village, but Iraqi and Kurdish forces pounded the militants' positions, with help from US-led coalition warplanes, which carried out airstrikes.
"The troops counted more than 70 bodies of IS militants scattered around the pounded positions and at edges of the village," the source said, adding that a senior IS leader, Taha al-Afri was among those killed.
Two members of the Kurdish forces, known as the Peshmerga, were also killed and five others wounded in the clashes, the source revealed, adding that Othman Tirani, a Peshmerga commander, was among those wounded.
Military troops counted more than 70 bodies of IS militants scattered
The Iraqi and Peshmerga forces have continued their shelling on IS positions in the village and the surrounding areas and were preparing to carry out a counter attack to retake control on the village, the security source said.
The battle comes a day after IS militants managed to seize control of the town of Gwer for several hours after they crossed the nearby Zab river on boats from nine directions. However, they were pushed back by the Peshmerga, in a battle which left 28 Peshmerga fighters and 45 IS militants dead.
The security situation in Iraq has drastically deteriorated since June 10, when bloody clashes broke out between the Iraqi security forces and Sunni militants.
The militants later took control of the city of Mosul in northern Iraq and seized swathes of territories in Nineveh and other predominantly Sunni provinces.