Iraq is rebuilding its army to address weaknesses including poor leadership and training that led to Baghdad's forces being swept aside by militants, the defence minister said Tuesday.

The Islamic State (IS) jihadist group spearheaded a major offensive that overran large areas north and west of Baghdad in June, during which multiple Iraqi divisions collapsed.

In remarks broadcast on the 94th anniversary of the founding of Iraq's army, Defence Minister Khaled al-Obaidi offered a stark assessment of the problems that contributed to the disaster.

"Weak leaders and incompetent members assuming the chain of command, a lack of discipline, weak training, poor performance and the disintegration of public trust in the security forces... were the true reasons for the setback," Obaidi said.

Iraq is working to address these problems, "beginning from the top of the army and its leadership and replacing them with nationalist, professional and competent members and leaders not tainted by corruption or lacking courage," he said.

Speaking Tuesday, Prime Minister Haider al-Abadi emphasised the need to fight corruption in the military.

"There is no place... for corrupt (people) among us, for the corrupt (person) who wants to destroy this military institution," Abadi said.

"We will continue fighting corruption and continue pursuing corruption to defend this army."

Now backed by US-led air strikes, international advisers, Kurdish troops, Shiite militiamen and Sunni tribes, Iraqi forces have begun to claw back some areas.

But the jihadists still control significant territory, including three cities that will be a major challenge to retake.