Iraqi forces backed by helicopters launched attacks on Sulaiman Bek from three sides, forcing al-Qaeda-affiliated militants who had overrun the Salaheddin province town to retreat, local official Talib al-Bayati told.
Militants initially took part of the town and nearby areas on Thursday, only to be pushed back the following day.
But security forces then withdrew for unknown reasons, Bayati said, and the militants were again in control of part of the town on Saturday and later made further gains.
At least four civilians had been killed and eight wounded since Thursday.
Sulaiman Bek has been hit by numerous attacks over the past year, and was briefly seized by al-Qaeda-affiliated militants in late April.
Al-Qaeda militants, emboldened by the conflict in neighboring Syria, have sought to position themselves as the champions against the Iraqi government, though major Sunni tribes oppose the group's extremist ideology and are fighting against it.
Iraqi Prime Minister Nouri al-Maliki has called for national unity among Iraqis in the war against al-Qaeda.
RA/NJF