Bazwaya: Fighting has raged as Iraq's special forces began their assault on Mosul itself, part of operations to drive the Islamic State terrorist group from the country's second largest city.

Troops opened up with artillery, tank and machine gun fire on IS positions on the edge of the Gogjali neighbourhood on Tuesday, with the extremists responding with guided anti-tank missiles and small arms to block the advance. Airstrikes by the US-led coalition supporting the operation added to the fire hitting the district.

If Iraqi forces enter Gogjali neighbourhood it will mark the first time troops have set foot in Mosul in over two years, after they were driven out by a much smaller force of IS extremists in 2014.

Blackish grey smoke hung in the air east of the Islamists' stronghold and the regular sound of outgoing artillery fire could be heard, said a Reuters reporter near Bazwaya, about five kilometres east of Mosul.

Explosions could be heard further east.

The IS fighters quickly lit fires to make dark smoke in order to obscure aircrafts' view of the city.

"We are currently fighting battles on the eastern outskirts of Mosul," Lieutenant-General Abdul Wahab al-Saidi of the elite Counter Terrorism Service (CTS) said.

"The pressure is on all sides of the city to facilitate entry to the city centre."

Two weeks after Iraqi forces launched their campaign to retake Mosul from Islamic State, they have cleared scores of villages and towns on the Nineveh plain east of the city and are advancing along the Tigris river from the south.

But fighting inside the city itself, the jihadists' last big bastion in Iraq and still home to 1.5 million residents, could take months.

The offensive, involving regular army forces, elite counterterrorism units, federal police, Kurdish peshmerga fighters and Shiite militias, is the most complex since the 2003 US-led invasion which toppled Saddam Hussein.

Commanders have warned the fighting could last for months.

In Bazwaya, CTS guards told Reuters that a suicide car bomber tried to attack their position early on Tuesday, but they halted it with machine gun fire. Rubble and parts of the attacker's body could still be seen by a nearby berm.

As well as the suicide attacks, the Islamic State militants have slowed the army's advance with snipers, mortar fire, roadside bombs and booby traps inside abandoned buildings.

They have also displaced thousands of civilians from villages and forced them to walk alongside retreating fighters toward Mosul, using them as "human shields", UN officials and villagers have said.

Mosul is many times bigger than any other city controlled by Islamic State in either Iraq or Syria. Its recapture would mark the end of the Iraqi wing of the caliphate which it declared in parts of both countries two years ago although the hardline Sunni militants have recovered from previous setbacks in Iraq.

Prime Minister Haider al-Abadi said on Monday that Iraqi forces were trying to close off all escape routes for the several thousand Islamic State fighters inside Mosul.

"God willing, we will chop off the snake's head," Mr Abadi, wearing military fatigues, told state television. "They have no escape, they either die or surrender."

The United Nations has said the Mosul offensive could trigger a humanitarian crisis and a possible refugee exodus if the civilians inside Mosul seek to escape, with up to 1 million people fleeing in a worst-case scenario.

The International Organisation for Migration said that so far nearly 18,000 people had been displaced since the start of the campaign on October 17, excluding those forced back into Mosul by the retreating jihadists.

Inside Bazwaya, white flags still hung from buildings, put up a day earlier by residents eager to show they wouldn't resist the forces' advance. Some residents stood outside their homes, and children raised their hands with V-for-victory signs.

The families, estimated to number in the hundreds, will be evacuated from the village to a displaced persons camp, according to Brigadier General Haider Fadhil of the Iraqi special forces.

AP, Reuters