Iraqi Kurdish forces came under heavy fire from a salmon-coloured house on the edge of the Islamic State group-held town of Bashiqa, but when they stormed it, it was empty.

"The fiercest resistance was coming from here," said Corporal Hawkar Weis, pointing to the two-storey house on the eastern side of Bashiqa, which is now under the control of Kurdish peshmerga forces.

"But when we entered, there was no one here. The Daesh fighters were using tunnels to cross from this house to the other neighbourhoods," the portly peshmerga fighter said, using an Arabic acronym for the extremist group.

Peshmerga forces recaptured Bashiqa from IS this week, after street fighting and air strikes that heavily damaged many of the town's low, brightly painted homes and rows of shops.

Seizing it was a final step in securing the eastern approaches to Mosul, three weeks into an offensive by Iraqi forces backed by a US-led coalition to retake the country's second city.

Even after the Kurdish forces overran most of Bashiqa, they struggled to clear out a handful of IS fighters scurrying through a network of tunnels dug under its residential neighbourhoods.

As the jihadists made their last stand in Bashiqa on Tuesday, they used the underground pathways to transport fighters and suicide bombers to inflict as much damage as possible.

The pink house was the network's nerve centre.

Weis and two other peshmerga corporals walked gingerly through hallways littered with shattered glass and filthy bedding.

Their weapons were raised, they explained, because there could still be one or two IS militants hiding out in the home.

They turned the corner into a rectangular room, darkened by thick blankets hung up on the windows and dominated by a gaping hole several metres (yards) deep.

A small motor was suspended above the hole on thick metal pipes, attached to a hook.

IS fighters used the motor to haul buckets of dirt out, dumping them into the surrounding rooms -- but never outside.

- 'Stay above ground' -

"If (IS fighters) take the dirt outside, then the coalition warplanes will see them and know where they are. So they hide the dirt from the tunnels inside the rooms," Weis said.

Indeed, the surrounding bedrooms were full of small mountains of dirt -- sometimes crowned with a wheelbarrow or shovels.

IS fighters had taped a hand-drawn map above the tunnel mouth to indicate at least ten other entrances scattered around Bashiqa, with distances marked in metres between certain rooms, houses, and streets.

Peshmerga fighters described a twisted game of whack-a-mole, waiting for IS fighters to emerge from their underground maze to strike.

"IS fighters are protecting themselves from coalition air strikes by hiding in the tunnels," said Major General Iskandar Hajji, a local peshmerga commander.

"We have a problem with these tunnels -- we can't do anything except wait for them to come out so we can fight them," he told AFP.

At least one senior officer lost his life on Tuesday when a trio of suicide bombers emerged from a tunnel mouth in eastern Bashiqa.

"A major general came back from retirement to fight Daesh here. Suicide bombers jumped out of one of the tunnels. He was able to kill two of them, but the third one detonated himself," Weis said.

Another tunnel entrance in the same house could be entered via a crude set of dirt steps.

A lanky peshmerga fighter who identified himself as Corporal Idris peered into the tunnel and fired his assault rifle into the abyss, pausing to listen for any return fire or ricochet.

He pulled his shirt over his nose and mouth and ventured a few metres into the tunnel before turning back.

"We are still not sure what is in there. It's better to stay above ground," he said.