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Brussels: The European Union has hailed the defeat of the Islamic State group in Mosul as a "decisive step" in fighting terrorism but called on Iraqis to work together to improve their country.

Representational image. Reuters

Iraqi prime minister Haider al-Abadi earlier announced that pro-government forces had retaken the second city from Islamic State after a months-long battle that killed thousands of civilians and forced nearly a million people from their homes.

"The recovery of Mosul from the hands of (Islamic State) marks a decisive step in the campaign to eliminate terrorist control in parts of Iraq and to free its people," the EU foreign affairs chief Federica Mogherini and its aid commissioner Christos Stylianides said in a joint statement on Sunday.

But they urged Iraqis to pick up the pieces of their country, parts of which were easily overran by Islamic State three years ago.

"It is now essential that a process of return and the re-establishment of trust between communities begins, and that all Iraqis are able to start building a shared future," they said.

Islamic State still controls swathes of western Iraq including much of the desert Anbar province and rival forces, which largely cooperated against the jihadists in Mosul, are expected to compete for a share of the spoils.

Abadi himself has faced accusations of incompetence and corruption in his government, and followers of popular cleric Moqtada Sadr have staged large protests in Baghdad calling for electoral reform.

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European Union hails liberation of Mosul, urges Iraqis to rebuild their country - Firstpost