The official in a regional security command centre said the insurgents mounted the operation at Tal Albu Jarad village as part of a battle for control of Baiji refinery, which has changed hands several times.
After receiving reinforcements, Islamic State militants recaptured three neighbourhoods in the town of Baiji near the refinery, but fresh clashes have erupted there, the security official said.
The fighting has seen some Islamic State fighters become trapped in the refinery while siege from government forces and militias.
Iraq's U.S.-backed government is focused on two key areas in its bid to loosen the grip of Islamic State, which controls a third of major oil producer Iraq and large parts of neighbouring Syria.
As well as the battle over Baiji in the north, Iraqi government forces are hoping to oust Islamic State in Anbar, a vast western province mostly held by the insurgents.
Islamic State has threatened to march on Baghdad, a scenario that is unlikely given the large numbers of security forces and their Shi'ite militia allies in and around the capital.
But the group has claimed responsibility for suicide bombings and roadside bomb attacks in Baghdad. On Wednesday, six people were killed by bombings in different parts of the city, medical and police sources said.
Reporting by Baghdad bureau; Writing by Michael Georgy; Editing by Raissa Kasolowsky.
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