Forces loyal to Libya's U.N.-backed unity government pushed Islamic State fighters back towards their stronghold of Sirte on Wednesday but lost more than 30 men, including seven killed in a car bombing, officials said.
In a televised statement from the streets of Abu Grain, military spokesman Mohamed al-Gasri said the forces had "liberated" the small town and two nearby villages after heavy fighting.
Western powers are counting on the new government to unify Libya's political and armed factions to take on Islamic State. The government arrived in Tripoli in late March and is still trying to establish its authority.
Islamic State gained control over Sirte last year and has built up its most important base outside Syria and Iraq in the Libyan coastal city. However, it has struggled to hold on to territory elsewhere in Libya.
Islamic State militants overran the town of Abu Grain and several villages after staging suicide attacks against checkpoints in the area on May 5.
The unity government then created a new operations room in Misrata, which announced a campaign to recapture Sirte.
Abu Grain is about 140 km (85 miles) west of Sirte and about 100 km south of Misrata.
The operations room said 32 of its forces had been killed and 50 wounded in Wednesday's fighting, according to a brief statement sent to journalists. Seven died in a car bombing in Buayrat al-Hasun, about 90 km west of Sirte.
The advance came a day after military forces retook Abu Grain checkpoint.
They now also control the villages of Abu Najaym and Zamzam, Gasri said.
"We declare the completion of the first stage of al-Bonyan al-Marsous after we pushed the militants of Daesh (Islamic State) back to the outskirts of Sirte," he said, referring to the name the operations room gave to the campaign for Sirte.
A report published on Wednesday by campaign group Human Rights Watch found that Islamic State in Sirte had unlawfully executed at least 49 people accused of offenses including spying, sorcery, and blasphemy over one year from February 2015.
It quoted a military intelligence officer in Misrata as saying Islamic State had some 1,800 fighters in Sirte and that at least 70 percent of them were foreign.
Some two-thirds of the city's 80,000 residents have fled, the report said.
REUTERS