The Islamic State group broke through Kurdish defences in northern Iraq on Tuesday and killed an American service member deployed as part of the US-led coalition against the jihadists.

The attack came as the United Nations said that fighting with IS in northern Iraq could displace another 30,000 people, adding to millions who have already fled their homes.

And in Baghdad, throngs of Shiite pilgrims braved the threat of bombings by IS, which have killed dozens of people in recent days, to take part in a major annual religious commemoration.

The service member, whom the Pentagon confirmed was American, was at least the third killed by enemy fire in Iraq since IS overran swathes of the country in 2014.

President Barack Obama hailed the 2011 withdrawal of American troops from Iraq as a major accomplishment of his presidency, but US forces have been drawn back into combat in the country against IS.

"On May 3, 2016, a coalition service member was killed in northern Iraq as a result of enemy fire," the coalition said in a statement.

Pentagon spokesman Peter Cook said the death occurred during an IS attack on a peshmerga position north of Iraq's jihadist-held second city Mosul.

US Defence Secretary Ashton Carter said from Germany: "Our thoughts and prayers are with that service member's family."

- Killed by 'direct fire' -

A coalition military official said on condition of anonymity that the service member was killed at 9:30 am (0630 GMT) by "direct fire" after "enemy forces penetrated" the Kurdish peshmerga forces' line.

Kurdish forces are deployed in Nineveh province, whose capital Mosul is IS's main hub in the country.

IS attacked the peshmerga in multiple areas of northern Iraq on Tuesday in an attempt to "thwart the plan to liberate Mosul," said Jabbar Yawar, the secretary general of the autonomous Kurdish region's peshmerga ministry.

Iraq's Joint Operations Command said IS overran the Tal Asquf area and that the group was using suicide bombers in the ongoing fighting.

Tal Asquf is a small Christian town whose population fled in 2014.

The United States announced last month that it was deploying additional forces to Iraq, bringing the official total to more than 4,000.

Pentagon spokesman Jeff Davis said the forces would be authorised to advise Iraqis at the battalion and brigade level as opposed to larger divisions, potentially exposing them to greater risks closer to the front lines.

The coalition military official said the service member killed on Tuesday was involved in advising and assisting forces, and was three to five kilometres (two to three miles) behind the front line.

- Boots on the ground -

The size of the unit he was advising was not immediately clear.

The coalition is carrying out daily air strikes against IS, and while most American forces on the ground in Iraq play advisory and support roles, Washington has also deployed special forces to carry out raids against IS, and US Marines to provide artillery support.

Two US military personnel have already been killed by the jihadists in Iraq: an American Marine by rocket fire in March and a special forces soldier who died of wounds received during a raid last October.

Obama repeatedly pledged that there would be no "boots on the ground" to combat IS, but the administration has since sought to define the term as meaning something other than American forces being on the ground and in combat.

"They are wearing boots, and they are on the ground, but that... doesn't mean that they are in large-scale ground combat," State Department spokesman John Kirby recently told journalists.

As Kurdish forces and the jihadists clashed on Tuesday, the United Nations expressed concern that "as many as 30,000 newly displaced individuals" could arrive in Makhmur southeast of Mosul, fleeing fighting in the area.

In Baghdad, tens of thousands of pilgrims converged on a shrine to mourn the death of Imam Musa Kadhim, the seventh of 12 imams revered in Shiite Islam, who was killed in 799 AD.

A shrine official said that "millions" had taken part in commemorations in recent days, despite IS-claimed bombings targeting the pilgrims that have killed at least 37 people over the past week.