At least three civilians and seven Iraqi Kurdish peshmerga fighters have been killed in northern Iraq in an attack blamed on the Islamic State jihadist group, the forces said Friday.

The jihadists attacked the village of Khidir Jija, south of Arbil, late Thursday, killing three civilians, a statement said.

The peshmerga, Kurdistan's armed forces, launched an operation in response, and seven fighters died when "an explosive device planted by IS elements" blew up.

The three civilians, siblings aged 11-24, were children of a village official, a relative told AFP.

IS seized swathes of Iraq in a lightning offensive in 2014, before being beaten back by a counter-insurgency campaign supported by a US-led military coalition.

The Iraqi government declared the Sunni extremists defeated in late 2017, but the jihadists retain sleeper cells which continue to strike security forces with hit-and-run attacks.

Late last month, five Iraqi Kurdish peshmerga fighters were killed and four wounded in a roadside bombing claimed by IS.

That bombing, south of the city of Sulaimaniyah, underlined the "serious threat" IS still poses to the Iraq's autonomous Kurdistan region, the region's prime minister Masrour Barzani said at the time.