A video obtained by The Guardian allegedly shows the firefight in northern Iraq where Islamic State forces overran Kurdish Peshmerga troops and their American advisors, prompting the call for a "quick reaction force" of US Navy SEALs, one of whom was killed in the ensuing firefight.

The video shows American troops and possibly private security contractors dressed in civilian clothes in an intense firefight, exchanging fire from behind several vehicles that appear to have been damaged. Another part of the video shows a US military Blackhawk helicopter landing and taking off, as another aircraft circles nearby. The landing helicopter could be the aircraft used to evacuate the SEAL who was killed in the battle.

The fighting began when Islamic State militants breached the Kurdish forward lines about 20 miles north of Mosul at around 7:30am local time Tuesday, while an American team of advisers was at the village of Tel Asqof, approximately two miles away, a US military spokesperson said.

The American advise and assist team called in the quick reaction force about 20 minutes later after becoming involved in the firefight with Islamic State forces, he said.

Petty Officer First Class Charles Keating IV, a member of the quick reaction force which was comprised of special operations forces, was struck by "direct fire" at approximately 9:30am local time, Army Colonel Steve Warren told a Pentagon briefing.

Keating was evacuated within an hour, but died of his wounds, Warren said.

The elite serviceman was the third American to be killed in direct combat since a US-led coalition launched a campaign in 2014 to "degrade and destroy" Islamic State and is a measure of its deepening involvement in the conflict.

Coalition aircraft carried out air strikes after the attack, killing more than 50 Islamic State militants, Warren said, adding that the attack included at least 145 Islamic State militants and was one of the largest recent attacks by the group.

He said quick reaction forces are formed on a mission-by-mission basis depending on the threat level, distance of the threat and other factors, Warren added.