The Islamic State launched a failed attack on the Iraqi town of Dhuluiya on Thursday, sparking clashes that left at least five of its fighters dead, the army and residents said.

"The Iraqi security forces repelled an attack launched this morning by Daash," military spokesman Qassem Atta told AFP, using IS' former Arabic acronym.

"The army and airforce, supported by tribal fighters, killed five Daash members, including a senior leader," he said.

Dhuluiya, which is located 90 kilometres (55 miles) north of Baghdad, is a key target in the jihadist group's attempt to progress toward the capital.

"We killed eight of them. Four bodies are still strewn in the street and Daash has now retreated," said one tribal fighter contacted in Dhuluiya by 'phone.

He said one Iraqi policeman was also killed and six people wounded among pro-government ranks during the fighting, which he said was very intense and lasted from 11:00 am (0800 GMT) until 2:30 pm.

The Juburi tribe in the town's southern district has long been a key Sunni ally of the Shiite-dominated government.

It was a major purveyor of fighters to the anti-jihadist Sahwa network of Sunni tribal fighters created by the United States in 2005-2006 to combat Al-Qaeda.

Prime Minister Nuri al-Maliki is now seeking to revive the moribund organisation in a bid to contain IS, which launched a massive offensive on June 9 and swiftly conquered much of the country's Sunni heartland.