Iraqi forces broke the Islamic State group's months-long siege of the country's largest oil refinery Saturday as America's top officer flew in to discuss the expanding war against the jihadists.

Completely expelling IS fighters from the area around the refinery would be another significant achievement for Baghdad, a day after pro-government forces retook the nearby town of Baiji.

"Iraqi forces... reached the gate of the refinery," Salaheddin province Governor Raad al-Juburi told AFP.

Three military officers confirmed that Iraqi forces had reached the refinery, 200 kilometres (120 miles) north of Baghdad, where security forces have been surrounded and under repeated attack since June.

This new success for the government came a day after the recapture of nearby Baiji, the largest town to be retaken since IS-led militants swept across Iraq's Sunni Arab heartland in June.

It also followed another victory earlier in the week in the eastern province of Diyala, where a joint operation by the army and Shiite militiamen wrested back control of the Adhaim Dam, one of the country's largest.

France, one of the nations taking part in anti-IS coalition air strikes, on Saturday hailed the "remarkable progress" made by Iraqi forces.

- Top officer in Iraq -

A breakthrough preliminary deal reached on Thursday between the federal government and the autonomous Kurdish region on long-standing budget and oil disputes also raised the prospect of increased coordination in the fight against IS.

But with three major cities and a swathe of other territory still in IS hands, the fight is far from over.

America's top military officer, chairman of the Joint Chiefs of Staff General Martin Dempsey, arrived in Iraq for talks on the expanding military operations against the jihadists with Prime Minister Haidar al-Abadi and other Iraqi and American officials.

He also travelled north to Arbil and met Massud Barzani, president of the autonomous Kurdish region.

A US-led coalition is carrying out a campaign of air strikes targeting IS jihadists in both Iraq and Syria, and Washington has announced plans to increase the number of its military personnel in Iraq to up to 3,100.

Dempsey "arrived in Iraq today to visit with US troops, commanders and Iraqi leaders", his spokesman, Colonel Ed Thomas, told AFP.

"The primary purpose of his visit is to get a first-hand look at the situation in Iraq, receive briefings and get (a) better sense of how the campaign is progressing," Thomas said.

The United States and other governments have pledged trainers and advisers to aid Iraqi security forces in their battle against IS.

- US assesses deployment sites -

American personnel are assessing deployment sites, including Al-Asad Air Base in Anbar, a key province that stretches from the borders with Syria, Jordan and Saudi Arabia to the western approach to Baghdad.

The IS jihadist group released an audio recording on Thursday purportedly of its chief, Abu Bakr al-Baghdadi, after rumours that coalition air strikes may have killed or wounded him.

It has had most of the initiative in recent months, but the man said to be Baghdadi seemed at pains to reassure his followers, and the lack of video in the message failed to dispel speculation he might still have been wounded.

The operation to retake Baiji began more than four weeks ago when security forces and pro-government fighters began advancing towards the town from the south.

Slowed by bombs the militants had planted on the way, they finally entered the town on October 31.

The huge refinery once produced 300,000 barrels a day, accounting for half of the nation's needs in refined oil products.

It is also on the road linking the two largest cities in Iraq under jihadist control, Mosul and Tikrit.

Washington has repeatedly stated that it will not deploy "combat troops" to Iraq, but Dempsey said on Thursday that sending out advisers alongside Iraqi forces was something that "we're certainly considering".

As federal forces, Kurdish peshmerga fighters, Sunni tribesmen and Shiite militias battle IS on several fronts, near-daily bombings take their toll.

On Saturday, a blast in an area north of Baghdad killed at least four people, a day after at least 17 died in two explosions in northwestern neighbourhoods of the capital.