Iraqi forces advance on IS chemical launchpad
"The operation aims to liberate Bashir, after we succeeded several days ago in cutting off supplies to [IS] in the Bashir area," said Abu Ridha al-Najjar, leader of the operation.
Nine fighters from the Popular Mobilisation forces, an umbrella group of Baghdad-aligned militias, were killed in clashes with IS militants on Sunday, with 60 others wounded.
The reports were confirmed by Sheikh Maitham al-Zaidi, commander of Furqat al-Abbas - one of several pro-government groups involved in the operation.
Last month, the Islamic State group shot rockets containing suspected mustard agent from the town at nearby Taza Khurmatu.
Three children, including a six-month-old baby were killed in the attack while thousands of others were treated for burns, rashes and respiratory problems.
Iraqi Prime Minister Haider al-Abadi vowed the attack would not go unpunished before pounding an IS-held village with rockets hours later.
The news comes after a string of territorial victories for Iraqi forces since launching a renewed offensive against the militants six months ago.
The international US-led coalition has liberated key IS strongholds including Hit.
Ramadi, the capital of Anbar province, was declared fully "liberated" by Iraqi and coalition officials in February.
Coalition officials estimate IS has lost more than 40 percent of the territory it held in Iraq after the summer of 2014.
"[IS] fighters now are stuck," said Captain Aysar Hassan.