(Story corrects third paragraph to show Mosul fell in July, not June, after nine, not eight, months of urban warfare in August 29th instance.)

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BAGHDAD (Reuters) - Iraqi forces battling to retake the small town of al-‘Ayadiya where militants fleeing Tal Afar have entrenched themselves, saying on Tuesday the fighting is “multiple times worse” than the battle for Mosul’s old city.

Hundreds of battle-hardened fighters were positioned inside most houses and high buildings inside the town, making it difficult for government forces to make any progress, army officers told Reuters.

Iraqi government troops captured the town of Mosul from Islamic State in July, but only after nine months of grinding urban warfare.

But one Iraqi officer, Colonel Kareem al-Lami, described breaching the militants’ first line of defense in al-‘Ayadiya as like opening “the gates of hell”.

Iraqi forces have in recent days recaptured almost all of the northwestern city of Tal Afar, long a stronghold of Islamic State. They have been waiting to take al-’Ayadiya, just 11 km (7 miles) northwest of the city, before declaring complete victory.

Tough resistance from the militants in al-‘Ayadiya has forced the Iraqi forces to increase the number of air strikes, as well as bring in reinforcements from the federal police to boost units from the army, air force, Federal Police, the elite U.S.-trained Counter-Terrorism Service (CTS) and some units from the Shi’ite Popular Mobilization Forces (PMF).

Up to 2,000 battle-hardened militants were believed to be defending Tal Afar against around 50,000 government troops last week.

Military intelligence indicated that many militants fled Tal Afar to mount a staunch defense in al-‘Ayadiya. Many motorcycles carrying the Islamic State insignia were seen abandoned at the side of the road outside al-’Ayadiya.

Though the exact numbers of militants on the ground in al-‘Ayadiya was still unclear, al-Lami, the Iraqi Army colonel, estimated they were in their “hundreds.”

“Daesh (Islamic State) fighters in their hundreds are taking positions inside almost every single house in the town,” he said.

Sniper shots, mortars, heavy machine guns and anti-armored projectiles were fired from every single house, he added.

“We thought the battle for Mosul’s Old City was tough, but this one proved to be multiple times worst,” al-Lami said. “We are facing tough fighters who have nothing to lose and are ready to die.”

Two army officers told Reuters that no significant advances had yet been made in al-‘Ayadiya. They said they were waiting for artillery and air strikes to undermine the militants power.

The extra Federal Police troops that were called in said late on Tuesday that they had controlled 50 percent of the town, deploying snipers on the high buildings and intensified shelling the militants headquarters with rockets, a federal police spokesman said in a statement.

Tal Afar became the next target of the U.S.-backed war on the jihadist group following the recapture of Mosul, where it had declared its “caliphate” over parts of Iraq and Syria in 2014.