Militants attacked the town of Muqdadiyah northeast of Baghdad on Friday, sparking clashes that killed 30 Shia militiamen, a police colonel and a doctor said.
The fighting began this morning and eased later in the day with security forces still in control of Muqdadiyah, a key approach to Diyala provincial capital Baquba, and militants deployed in adjoining areas.
Shia militiamen have joined Iraqi security forces in fighting against a major offensive by Sunni Arab militants that overran all of one province and chunks of three more in a matter of days.
Security forces performed poorly during the initial days of the assault, in some cases shedding uniforms and abandoning vehicles in their haste to flee.