(Reuters) - Iraqi security forces backed by Shi'ite militias on Sunday broke the two-month siege of Amerli by Islamic State militants and entered the northern town, officials said.

The mayor of Amerli and army officers said troops backed by militias defeated fighters from the Islamic State (IS) to the east of the town. Fighting continued to the north of Amerli in several villages.

"Security forces and militia fighters are inside Amerli now after breaking the siege and that will definitely relieve the suffering of residents," said Adel al-Bayati, mayor of Amerli.

It was hailed as a huge strategic victory for the Iraqi security forces and the militia fighters who joined them after a summer that saw the Islamic State lead other Sunni armed groups in seizing almost one-third of the country's territory.

"Amerli's battle is a golden victory registered by the Iraqi security forces who are still fighting the terrorist groups in north and south areas of Amerli," said military spokesman Qassim al-Attta.

Atta described Amerli as a launching pad to retake the northern province of Salahuddin, including its capital, which was captured by IS in June.

"The next step will be holding the ground tightly and liberating all the areas which link Amerli to Salahuddin," Atta said on state television. "Our forces will gather in thousands in Amerli to march towards Tikrit."

While Kurdish fighters, backed by US air strikes, had beat back the Islamic State after losing terrain in August, the collection of Shi'ite security forces and militias had yet to score a significant military win.

The advance of the Iraqi forces in Amerli comes after the U.S. military carried out air strikes overnight on IS militant positions near the town and airdropped humanitarian supplies to the trapped residents there. More aid was dropped from British, French and Australian planes.

The Pentagon said the warplanes hit three Humvee patrol vehicles, a tank and an armed vehicle held by militants in addition to a checkpoint controlled by the group, according to the military's Central Command, which runs U.S. operations in the Middle East.

U.S. ROLE CRITICAL

One Kurdish fighter on a base north of Amerli described the American role as critical in ending the siege.

"It would have been absolutely impossible without the American planes," the Kurdish peshmerga fighter said. "The strikes prevented the Islamic State from moving freely andtargeted them with 100 percent accuracy."

Residents of Amerli expressed relief.

"I can see the tanks of the Iraqi army patrolling Amerli's streets now. I'm very happy we got rid of the Islamic State terrorists who were threatening to slaughter us," said Amir Ismael, an Amerli resident, by phone.

Armed residents had managed to fend off attacks by IS fighters, who encircled the town and regarded its majority Shi'ite Turkmen population as apostates. More than 15,000 people had remained trapped inside Amerli.

North of Amerli, Shiite militia and Kurdish peshmerga fighters were deployed. The armed men were a reminder of how militia fighters have gained in popularity since the beginning of June when IS launched its blitz across northern Iraq.

"Our goal is all the same to fight IS and repel terrorism," said a fighter from the Peace Brigades, an offshoot of cleric Muqtada Sadr's Mahdi Army militia.

The mobilization of Shi'ite militias to take Amerli had created a fluid situation where the armed groups who once fought the American military were benefit ting from U.S. air strikes.

One Shi'ite fighter, who declined to give the name of his group, said all Shi'ite militia groups were present, including Asaib Ahl al-Haq, Kataib Hezbollah and Sadr's Peace Brigades.

"Everyone is here," the fighter said speaking on condition of anonymity. "We came to break the siege of Amerli. We came out of humanity. When the siege of Amerli is broken we will go back to our normal lives."

Fighting raged elsewhere in Iraq. In the western city of Ramadi, where Iraqi forces have been battling Sunni groups dominated by IS since January, a suicide bomber detonated an explosives-packed Humvee military vehicle, according to two police officers and a medical official.

The blast, targeting an unfinished nine-floor building, killed 22 security personnel and 15 civilians, the medical and police officials said. The building, used by security personnel, was in the centre of Ramadi in western Anbar province.

(Reporting by Isabel Coles and Ahmed Rasheed; Editing by Ned Parker and Stephen Powell)