BAGHDAD (REUTERS) - Islamic State fighters stormed a town in Iraq's western Anbar province on Saturday, its latest conquest in the desert region where it has chalked up a string of victories, a military official and people fleeing the scene said.

Islamic State seized the town of Kubaisa two days after the fall of the nearby town of Hit as the group sought to consolidate control in towns west of Anbar's capital Ramadi.

The fall of Kubaisa jeopardises the strategic Ain al-Asad military base, which allows Iraqi forces to send troops and supplies to defend the Haditha dam further west where a small number of Sunni tribes and government forces are fending off Islamic State forces.

Ain al-Asad lies beyond both Hit and Kubaisa. At least two civilians were killed and six others wounded in Kubaisa, said an official at the hospital in Hit.

Since taking Hit on Thursday, Islamic State fighters have raised their flags on the municipality building and police stations, while Islamic State vehicles were patrolling the streets of the town.

Islamic State took advantage of refugees fleeing Hit to enter Kubaisa, 19km to the east.

A man escaping Hit, named Abu Saif, described approaching the checkpoint for Kubaisa when three or four cars sped up from behind them and shot dead the soldiers guarding the city.

"We thought that they were displaced families as well. They didn't look like Islamic State militants to us," Abu Saif said.

The radical Sunni Muslim militants have captured swathes of western and northern Iraq, including the north's biggest city Mosul in June, as well as large areas of the east and north of neighbouring Syria.

In Mosul, for the Muslim holiday Eid al-Adha, Islamic State released a video of its followers celebrating the day in Mosul, with children waving machineguns and followers holding its black flag.

Elswhere, two bombs exploded just north of Baghdad in the towns of Tarmiyah and Husseiniyah, killing seven and wounding 18 others, police and medical officials said.

To the northeast in Diyala province, an officer and seven soldiers were killed in two ambushes in the nearby districts of Mansuriya and Muqdadiya, according to military sources.