Iraqi government forces on Friday retook the last town in the country still held by the Islamic State group as the jihadists' self-proclaimed "caliphate" faced collapse on both sides of the border with Syria.

The lightning recapture of the small Euphrates valley town of Rawa after a dawn offensive came as the jihadists also faced attack for a second day in the last town they still hold in Syria, Albu Kamal just over the frontier.

The Islamic State group (IS) has lost 95 percent of the cross-border "caliphate" it declared in Iraq and Syria in 2014, the US-led coalition fighting it said Wednesday.

Its losses include all of its major bastions, virtually confining it to pockets of countryside.

Government troops and paramilitary units "liberated the whole of Rawa and raised the Iraqi flag on all of its official buildings," General Abdelamir Yarallah of Iraq's Joint Operations Command (JOC) said in a statement.

Prime Minister Haider al-Abadi hailed the town's "liberation in record time" and said troops would now "conduct search operations in the desert to secure the border with Syria".

JOC spokesman General Yahya Rassoul said that "militarily, IS has been defeated, but we are going to hunt down its remnants to eradicate its presence."

Hisham al-Hashemi, an Iraqi expert on IS, said that after their loss of Rawa, the jihadists no longer exercised any real military or administrative power.

"What has been liberated are the populated areas with demarcated boundaries," Hashemi said.

"But the seasonal river valleys, the oases, the empty expanses of desert which make up around four percent of Iraqi territory, are still in the hands of IS."

Rawa was earlier bypassed in an offensive by the Iraqi army that resulted in the recapture of the strategically important border town of Al-Qaim this month.

The stretch of Euphrates valley abutting the border with Syria has long been a bastion of Sunni Arab insurgency, first against US-led troops after the invasion of 2003 and then against the Shiite-led government in Baghdad.

The porous frontier became a magnet for foreign fighters entering Iraq from Syria, which Baghdad accused of turning a blind eye, and a key smuggling route for arms and illicit goods.

US-led troops carried out repeated operations with code names like Matador and Steel Curtain in 2005 to flush out Al-Qaeda jihadists.

The region swiftly fell to IS when its fighters swept through the Sunni Arab heartland north and west of Baghdad in 2014 before proclaiming its "caliphate".

- 'Days now numbered' -

That offensive left the jihadists in control of a territory the size of Britain, but they have successively lost all their key strongholds, including Raqa in Syria and Mosul in Iraq.

"The days of the fake caliphate are now numbered," the US envoy to the coalition Brett McGurk tweeted on Friday.

In Syria, IS still holds around 25 percent of the countryside of Deir Ezzor province but is under attack both by government forces and US-backed Kurdish-led fighters.

In the border town of Albu Kamal, the Syrian army on Friday battled IS fighters who had mounted a surprise counterattack last week, pushing out government forces who had retaken it last month.

The Syrian Observatory for Human Rights, a Britain-based monitor of the war, said a new army offensive had successfully penetrated the town, with troops backed by Russian air strikes advancing from the west, east and south.

In Moscow, the defence ministry said six long-range bombers flying from Russia carried out a strike on IS sites around Albu Kamal.

In a sign that IS remains capable of inflicting serious damage despite its battlefield losses, the Observatory also said a car bombing blamed on group killed at least 26 displaced people at a checkpoint in Deir Ezzor province.

It said 12 children were among the victims of the attack.

Syria's state news agency SANA also reported an IS car bombing targeting "a gathering of displaced families from Deir Ezzor", giving a toll of 20 dead and 30 wounded.

With the jihadists' dreams of statehood lying in tatters following their defeats, Western attention is increasingly turning to the challenge of blocking foreign fighters from returning home to carry out attacks.

burs/srm/par

Source: AFP