Baiji lies at a crossroads between several frontlines, and control of the area is seen as the key to progress in other regions, including Anbar province where forces were also closing in on IS strongholds.
The army, police and counter-terrorism services, as well as thousands of fighters from the Popular Mobilisation (Hashed al-Shaabi), continued to gain significant ground in and around Baiji, officers said.
"Iraqi forces are moving deep into Baiji; they have retaken the industrial area and several other neighbourhoods," an army colonel told AFP.
After retaking most of the refinery to the north of the city, security forces were sweeping the sprawling complex for bombs and die-hard jihadists.
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"Inside the refinery, our forces are defusing booby traps and looking for the last Daesh terrorists we believe are still holed up in some buildings," he said.
The refinery, which once produced 300,000 barrels per day of refined products meeting half of Iraq's needs, is said to have been damaged beyond repair and to no longer be of huge strategic interest.
The bodies of at least 15 IS fighters were also found there and large numbers of wounded jihadists are reported to have been evacuated to the nearby IS strongholds of Hawijah and Sharqat.