Iraqi government troops battled Islamic state terrorists on the out skirts of Fallujah - a hallowed place name for Americans in the history of the Iraq War.

Now, it's held by Islamic State. And government troops are looking to take it back.

Fox News:

Fighting erupted early on Thursday in the militant-held city of Fallujah, about 40 miles west of Baghdad. The clashes on the city's northern outskirts killed four children, along with a woman and at least 10 militants, said Fallujah hospital director Ahmed Shami. He had no further details on clashes, beyond saying that four other children and another woman were wounded in the violence.

It was difficult to gauge the situation in Fallujah, which has been in the hands of the Islamic State since early January, when the militants seized much of the Western Anbar province along with parts of the provincial capital of Ramadi.

The United States has been carrying out airstrikes in recent days against Islamic State fighters, helping fend back their advance on Kurdish regions.

Meanwhile, Iraq's central government in Baghdad continued to be mired in political turmoil, after the president nominated a Shiite politician, Haider al-Abadi, to form the next government, putting him on track to replace embattled Prime Minister Nouri al-Maliki.

Al-Maliki on Wednesday said he will not relinquish power until a federal court rules on what he called a "constitutional violation" by President Fouad Massoum.

Al-Maliki insists he should have a third term in office but he is appearing increasingly isolated as the international community lines up behind al-Abadi, who has 30 days to come up with a proposal for a Cabinet.

The U.N. Security Council urged al-Abadi to work swiftly to form "an inclusive government that represents all segments of the Iraqi population and that contributes to finding a viable and sustainable solution to the country's current challenges."

If the Iraqi government plans to take back their territory city by city, it is going to get very bloody. Urban fighting is a nasty business as US Marines found out in Fallujah in 2004. We should expect that kind of bloodletting again if government troops seek to weed out the terrorists.

The government crisis also continues as former Prime Minister Nouri al-Maliki insists he is still the PM and will await a decision on the legality of the transfer of power from the Supreme Court.