By Stephen Kalin

NEAR MOSUL, Iraq (Reuters) - Iraqi forces faced fierce resistance from Islamic State militants in southern Mosul on Friday, the second day of a renewed push to take back the city after fighting stalled for several weeks.

An officer in the federal police forces, which joined the battle on Thursday, said there were heavy clashes in the southeastern Palestine district, but they had made progress in two other neighborhoods, disabling a number of car bombs.

Another officer, from an elite Interior Ministry unit fighting alongside federal police, said his forces were gaining ground in the Intisar district despite heavy clashes there.

Iraqi forces in the east and north of the city were clearing areas they had recaptured on Thursday before advancing any further, officers said, and the army was trying to cut supply lines to the town of Tel Keyf, north of Mosul.

Since the offensive began 10 weeks ago, U.S.-backed forces have retaken a quarter of the jihadists' last major stronghold in Iraq in the biggest ground operation there since the 2003 U.S.-led invasion that toppled Saddam Hussein.

Recapturing Mosul would probably spell the end for Islamic State's self-styled caliphate, and Prime Minister Haider al-Abadi has said the group would be driven out of Iraq by April.

Elite forces pushed into Mosul from the east in October but regular army troops tasked with advancing from the north and south made slower progress and the operation stagnated.

After regrouping this month, they renewed the offensive on Thursday, advancing from the south, east and north of the city, which has been under militant control for more than two years.

The second phase of the operation will see U.S. troops deployed closer to the front line inside the city.

On Friday, a Reuters reporter saw a handful of Americans in their MRAP vehicles, that tower over Iraqi tanks, accompanying top commanders to meetings in a village just north of Mosul.

Although the militants are vastly outnumbered, they have embedded themselves among Mosul residents, hindering Iraqi forces who are trying to avoid civilian casualties. Despite food and water shortages, most civilians have stayed in their homes rather than fleeing as had been expected.

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A civilian in the southeastern Wahda district, which is still under Islamic State control, said helicopters were visible overhead firing at Islamic State targets on the ground.

"One of them targeted a car carrying a rocket launching pad from which Daesh (Islamic State) was targeting counterterrorism positions in liberated areas," he said over the phone.

NORTHERN FRONT

On the northern front, Iraqi forces have yet to enter Mosul itself but on Friday they were clearing just-recaptured areas on its periphery as well as trying to cut off Tel Keyf.

"The enemy had occupied this area and used it for resting and resupplying toward Tel Keyf and Mosul," Major General Najm al-Jubbouri, a top commander in the offensive told Reuters in the northern district of Sada, which was recaptured on Thursday.

"It (Tel Keyf) is surrounded from the other sides and by our forces here," he said.

Jubbouri said the U.S.-led coalition backing Iraqi forces had killed 70 militants since late on Thursday and were using Apache helicopters, HIMARS rocket launchers and fighter jets.

Mosul is bisected by the Tigris river, and Iraqi forces have yet to enter the western side, where 2,000-year-old markets and narrow alleyways are likely to complicate any advance.

Coalition forces bombed the last remaining bridge connecting east and west Mosul late on Monday in a bid to block Islamic State's access across the Tigris River.

A medical source in Mosul told Reuters a large number of wounded militants had been ferried across the river to the emergency hospital on the western side of city on Thursday.

The source said the militants were denying wounded and sick civilians access to the hospital.

More than 114,000 civilians have been displaced from Mosul so far, according to the United Nations - a fraction of the 1.5 million thought to still be inside.

(Additional reporting by Saif Hameed; Writing by Isabel Coles; Editing by Louise Ireland)