Iraqi forces on October 20 took control of the last district in the oil-rich province of Kirkuk still in the hands of Kurdish Peshmerga fighters following a three-hour battle, security sources said.

The district of Altun Kupri lies on the road between the city of Kirkuk - which fell to Iraqi forces on October 16 - and Irbil, capital of the Kurdish semiautonomous region in northern Iraq.

Kurdish Peshmerga forces withdrew from the town after briefly battling the advancing Iraqi troops, Iraqi security sources said.

Baghdad's forces have advanced into Kirkuk Province largely unopposed as most Peshmerga forces withdrew without a fight. Still, Peshmerga forces have reported dozens of casualties.

The government advance has transformed the balance of power in northern Iraq and is likely to scuttle the independence aspirations of the Kurds, who voted overwhelmingly last month to secede from Iraq and take Kirkuk with them.

The U.S. State Department said late on October 20 that it was concerned by reports of violent clashes around Altun Kupri.

"We urge the central government to calm the situation by limiting federal forces' movements in disputed areas to only those coordinated with the Kurdistan Regional Government," department spokeswoman Heather Nauert said.

Despite Baghdad seizing control of the province, she said disputed areas of Kirkuk "remain disputed until their status is resolved in accordance with the Iraqi constitution."

Based on reporting by AFP and Reuters