Soldiers and civilians could be seen celebrating in the streets with Libyan flags and firing celebratory shots in the air.

Islamic State took over Sirte in early 2015, setting up its most important base outside the Middle East and extending its control along about 250 km (150 miles) of Mediterranean coastline.

Forces led by brigades from the western city of Misrata launched a counter-attack against the terrorist group in May, and since Aug. 1 the United States has carried out more than 490 air strikes to support them.

A Reuters journalist said that, by late afternoon, Islamic State fighters were still present in a handful of buildings.

Misrata-led brigades were trying to flush out the militants, who have been using tunnels for cover and, following the latest air strikes, the bodies of 12 fighters could be seen in the rubble.

A spokesman for the Misrata-led forces, Rida Issa, said they were in control of Sirte's Ghiza Bahriya neighbourhood, where officials said 34 Islamic State fighters, including at least two senior commanders, surrendered earlier in the day.

Militants have been clinging on in a few dozen buildings in Ghiza Bahriya for weeks.

In recent days, Libyan forces say dozens of women and children have escaped or been freed from the area.

The presence of the families had been one of the factors complicating attempts to push forward into the final sliver of land held by Islamic State (ISIS / Daesh / ISIL / IS), and several women carried out suicide attacks as they were being granted safe passage.

The forces fighting in Sirte are nominally aligned with a UN-backed government that moved to Tripoli in March, part of international efforts to end the conflict and political turmoil that have plagued Libya since long-time ruler Muammar Gaddafi was toppled in an uprising in 2011.

The chaos allowed Islamic State to gain a foothold from 2014 and implant itself in Sirte, Gaddafi's home city.

The loss of Sirte leaves the terrorist group without territory under its control in Libya, though it retains an active presence in the country.

Libyan and Western officials fear that sleeper cells and militants who have fled Sirte could turn to an insurgent campaign.

Almost all of Sirte's estimated population of 80,000 have fled since Islamic State (ISIS / Daesh / ISIL / IS) took over, and parts of the city have been left in ruins by recent fighting.

More than 700 fighters from the Misrata-led brigades have been killed in the campaign for Sirte, and more than 3,200 wounded, said Akram Gliwan, a spokesman at Misrata central hospital.

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