* Counter terrorism troops launch major operation
* Mosul residents say militants deploy rocket launchers
* Shia militias trying to seal off western supply routes

Iraqi special forces recaptured six districts of eastern Mosul on Friday, a military statement said, expanding the army's foothold in the Islamic State stronghold a day after its leader told his jihadist followers there could be no retreat.

An officer in the elite Counter Terrorism Service said CTS troops launched a major operation against the militants, who are now almost surrounded in their last major urban redoubt in Iraq.

CTS special forces took over the neighbourhoods of Malayeen, Samah, Khadra, Karkukli, Quds and Karama, the statement said, inflicting heavy losses on the militant fighters and raising the Iraqi flag over buildings.

One special forces officer told Reuters the CTS units may try to push all the way to the Tigris river, which runs through the centre of Mosul.

Iraqi television footage from the east of the city showed grey smoke rising, and a Reuters reporter in the village of Ali Rash, 7 km (4 miles) to the south east, heard helicopter gunships and cannon fire. Volleys of automatic rifle fire, possibly from the militants, were also audible.

A senior officer in the village said Iraqi troops had also taken two thirds of another Mosul district, Intisar, in the same eastern section of the city.

Islamic State fighters ‘are trying to get away’, Lieutenant-General Qassem Jassim Nazzal told Reuters.

In a sign of the fierce resistance which soldiers have encountered since entering the city on Monday, Nazzal said they blew up six bomb-laden cars, killed two suicide bombers, and killed 30 other people.

In the village of Ali Rash, retaken by Iraqi forces sweeping towards Mosul from the south and the east, the bloated and blackened bodies of three Islamic State fighters, dressed in khaki trousers and military boots, were left out in the open.

‘They're criminals, let the dogs eat them,’ another officer said.

SPECIAL FORCES

Iraqi regular troops and special forces, Shia militias, Kurdish peshmerga fighters and other groups backed by US-led air strikes launched their campaign to retake Mosul nearly three weeks ago.

Winning back the city would crush the Iraqi half of a cross-border caliphate declared by Islamic State leader Abu Bakr al-Baghdadi from a Mosul mosque two years ago.

Islamic State also holds large parts of neighbouring Syria, but Mosul is by far the largest city under control of the ultra-hardline militants in either country, and the campaign to retake it is the most complex in Iraq since the 2003 US-led invasion which toppled Saddam Hussein and unleashed a decade of turmoil.

In a speech released on Thursday Baghdadi - whose whereabouts are unknown - said there could be no retreat in a ‘total war’ against the forces arrayed against Islamic State, telling fighters they must remain loyal to their commanders.

Mosul is still home to nearly 1.5 million people, who risk being caught up in brutal urban warfare. The United Nations has warned of a potential humanitarian crisis and a refugee exodus, although Iraqi officials say Islamic State is holding the civilian population as human shields.

The United Nations says 22,000 people have been displaced since the start of the Mosul campaign. That figure excludes thousands from outlying villages forced to head back to Mosul by retreating Islamic State fighters who used them as human shields.

ROCKET LAUNCHERS

Mosul residents, speaking to Reuters by telephone, said Islamic State fighters were deploying artillery and rocket launchers in and near residential areas.

Some were hidden in trees near the Wahda district in the south, while others were deployed on the rooftops of houses taken over by the militants in the Ghizlani district close to Mosul airport, they said.

‘We saw Daesh (Islamic State) fighters installing a heavy anti-aircraft machine gun alongside a rocket launchpad, and mortars as well,’ one Mosul resident said.

People in southern and eastern neighbourhoods reported on Thursday night that their houses had been shaken by artillery and rocket barrages launched from their districts towards the advancing troops.

As well as the Islamic State resistance in Mosul itself, the militants have launched diversionary attacks across the country since the start of the offensive.

In the town of Shirqat, about 100 km (60 miles) south of Mosul, militants stormed a mosque and several houses early on Friday, a local police officer said, killing seven soldiers and fighters from the Shia Popular Mobilisation force.

The insurgents crossed from the eastern bank of the Tigris into the town at 3 a.m., taking over al-Baaja mosque and fanning out into alleyways. Security forces imposed a curfew and said reinforcements from the Popular Mobilisation, or Hashid Shaabi, forces were being sent to the town.

In their drive towards Mosul, Iraqi troops and Kurdish peshmerga fighters have closed in from the north, from the eastern Nineveh plains and up the Tigris from the south.

The Hashid Shaabi forces of mainly Shia militias joined the campaign on Saturday, launching an offensive to cut off the west.

A Hashid spokesman said they had made progress but had not completely closed off the western flank, and their fighters had seen some cars leaving Mosul on Thursday.