Kurdish fighters are advancing towards the militant-held city of Mosul, aiming to reverse gains by Islamic State insurgents, witnesses and a Kurdish peshmerga commander said yesterday.

Islamic State militants have seized a large chunk of northern Iraq in recent weeks, grabbing several towns, oilfields and Mosul Dam, possibly giving them the ability to flood cities or cut off water and electricity supplies.

Militants told residents of the dam area to leave, an engineer who works at the site and often comes into contact with the Sunni insurgents, said.

The engineer at Mosul Dam, Iraq’s biggest, said Islamic State militants told him they were planting roadside bombs along roads leading in and out of the facility, possibly in fear of an attack by Kurdish fighters who have been bolstered by US airstrikes.

Peshmerga spokesman Halgurd Hikmat said US planes - deployed over Iraq for the first time since the US troop withdrawal in 2011 because of the Islamic State’s alarming advances – had been striking targets near Mosul Dam over the last 24 hours.

“God willing we will regain control of the dam today,” he said.

Witnesses said Kurdish forces have recaptured the mainly Christian towns of Batmaiya and Telasqaf, 30 km (18 miles) from Mosul, the closest they have come to the city since Islamic State fighters drove government forces out in June.

The Sunni insurgents have tightened their security checkpoints in Mosul, conducting more intensive inspections of vehicles and identification cards, witnesses said.

The Kurds, who live in a semi-autonomous region in the north of Iraq, have long dreamed of independence from central governments in Baghdad which oppressed the non-Arab ethnic group for decades under former dictator Saddam Hussein.

Tensions were also high under outgoing Prime Minister Nuri al-Maliki who clashed with them over budgets and oil.

The Kurds since June have capitalised on the chaos in northern Iraq, taking over oilfields in the disputed city of Kirkuk.