Iraq is preparing a "major attack" to retake militant-held Fallujah, a senior official said Sunday, spelling a new assault for the city, west of Baghdad, where US forces repeatedly battled insurgents.

Iraq is preparing a "major attack" to retake militant-held Fallujah, a senior official said Sunday, spelling a new assault for the city, west of Baghdad, where US forces repeatedly battled insurgents.

Washington said it would help Baghdad in its fight against Al-Qaeda-linked militants but that there would be no return of US troops.

The takeover of Fallujah and parts of Anbar provincial capital Ramadi, farther west, is the first time militants have exercised such open control in major cities since the height of the bloody insurgency that followed the US-led invasion of 2003.

"Iraqi forces are preparing for a major attack in Fallujah," a senior Iraqi official told AFP.

Special forces have already conducted operations inside the city, the official said.

The regular army has paused on the edge of the city to allow residents time to leave, after which it will launch "the attack to crush the terrorists".

Fallujah is in the hands of fighters of the Al-Qaeda-linked Islamic State of Iraq and the Levant, a senior security official said on Saturday.

Secretary of State John Kerry said on Sunday that the United States would provide assistance to Iraqi forces in their battle against the militants but that it was "their fight".

Kerry said Washington was "very, very concerned" about the resurgence of ISIL but said it was not contemplating any return of US ground troops, after their withdrawal in December 2011.

"We are not obviously contemplating returning, we are not contemplating putting boots on the ground, this is their fight," Kerry told reporters in al-Quds.

"But we're going to help them in their fight... We are going to do everything that is possible to help them," he added.