Islamic State (Isis) fighters have repelled an Iraqi army attempt to retake Saddam Hussein's hometown of Tikrit in a battle that underlines the group's continuing strength despite losing control of the strategically important Mosul dam.

Boosted by Monday's recapture of the dam, Iraqi forces launched an assault on Tikrit, 80 miles (130km) north of Baghdad, with helicopter gunships and mortar and artillery fire. When troops entered the town from near its main hospital they faced heavy machine gun and mortar fire from the militants, forcing the military to pull back. It was the third failed attempt to retake Tikrit since it fell to Isis fighters more than two months ago, when Isis made sweeping gains in five provinces. Since then Tikrit has been controlled by Sunni militants and former members of Saddam's Ba'ath party.

A local official and a resident told Associated Press that the clashes began early on Tuesday on the south-western outskirts of the city. Isis landmines and snipers prevented Iraqi forces reaching the town from the west, officials told Reuters. By early afternoon residents in central Tikrit told the agency Isis fighters were firmly in control.

An Iraqi army spokesman, Lt Gen Qassim al-Moussawi, said a "slow and gradual" push to retake areas around Tikrit was under way. "There are still a lot of challenges and difficulties ahead of us," he said in a live briefing aired on state TV. "The war needs time, but we are determined to annihilate the Islamic State and to liberate all the areas they occupy even if we suffer heavy causalities, because we have no other choice."

The failed attack came as the UN's refugee agency, the UNHCR, announced one of its biggest ever aid operations to help 500,000 Iraqis who have fled violence in Iraq in the last two months. It plans to a launch a four-day airlift on Wednesday to provide tens of thousands of tents, plastic sheets, kitchen sets and jerry cans.

The Swedish furniture company Ikea is helping to provide the supplies. It has already donated $2.5m (£1.5m) and 150,000 mattresses and quilts for the UNHCR relief efforts in Iraq, making it the agency's largest private sector donor. The supplies, which have also been paid for from donations from Saudi Arabia, the US and Britain, will be flown to Irbil, the capital of the Kurdish autonomous region whichthat is sheltering an estimated 200,000 people seeking protection from Isis.

The UNHCR's spokesman, Adrian Edwards, said: "This is a very, very significant aid push and certainly one of the largest I can recall in quite a while. This is a major humanitarian crisis and disaster."

He added: "Barring last-minute delays, an air, road and sea operation will begin tomorrow [Wednesday], starting with a four-day airlift using Boeing 747s from Aqaba in Jordan to Irbil, followed by road convoys from Turkey and Jordan, and sea and land shipments from Dubai via Iran over the next 10 days." There are currently eight camps for displaced people in the Dohuk and Irbil governorates with another four to six planned.

The international threat posed by Isis was underlined in a new video warning in which the group pledged to "drown all of you in blood" if US air strikes continued. And in neighbouring Syria the group is said to have attracted a record number of new recruits.

The UK-based Syrian Observatory for Human Rights said more than 6,000 men joined Isis in July. Most were from Syria, but they include 1,200 foreign fighters, it said.

Isis fighters are closing in on the last Syrian government-held army base in the north-eastern province of Raqqa, prompting Syrian air strikes in the area.

Isis fighters are "worse than Saddam", a Kurdish commander told AFP. Major General Abdulrahman Kawiri said: "They use terror and chaos to force the population to flee. Then they take over."