Islamic State militants are edging closer to Baghdad from the south with the help of a secret tunnel network built by Saddam Hussein in the 1990s, according to Iraqi security and intelligence officials.

While the group has surged through the country's north, capturing the key Sunni town of Mosul and a number of large oilfields, it is now making gains in the rural Euphrates valley in what the US army termed the "triangle of death", because of the violence present during their occupation.

"We told the government that urgent military operations are essential to prevent the Islamic State from taking over further towns south of Baghdad; otherwise they will be very close to the capital," said Falah al-Radhi, head of a security panel in the provincial council of Hilla, south of Baghdad.

The Islamic insurgents currently control the city of Fallujah and parts of Ramadi city, both west of Baghdad, and have been transporting militants and weapons through secret desert tunnels to the town of Jurf al-Sakhar, 60km (40 miles) south of the capital.

"It makes it impossible for us to control this area," said an intelligence official.

The tunnels, built by Saddam Hussein to hide weapons from UN inspectors, allow the militants to hide from Iraqi military searches and continue their build-up of capabilities on the outskirts of Baghdad.

The rural landscape of the Euphrates valley offers insurgents vital protection from capture by Iraqi security forces, with its ditches and dense vegetation.

Armed Sunni tribesmen

The town of Jurf al-Sakhar was seized by approximately 400 militants in July. The militant group used mortars and suicide bombings to take control of police stations and the mayor's office.

The Iraqi army is beginning to drop bombs on the terrain in the hope of striking militants in hiding or to deter their edge towards Baghdad.

"Islamic State fighters swept the town and kicked out security forces, and to regain control we need to deal with around 10,000 acres of farmland area," said a military colonel.

"We have stared to follow a scorched earth policy. This is tough, we know, but army helicopters should have clear vision to chase and destroy them."

In the town of Yusufiya, even closer to Baghdad at 20km (12 miles) south, Sunni tribesmen have taken up arms against pro-government forces.

Government forces said that they were fighting Islamist "sleeper cells" in the town but also 50 tribesmen armed with rocket-propelled grenades, roadside bombs and machine guns.

The US military and Iraqi security officials' previous estimate of 3,000 Islamic State fighters being present in Iraq is set to be raised to 20,000 after a huge influx of new recruits following their June advance.