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A member of Islamic State militants fires a Grad missile towards Kurdish-led forces in Manbij.Credit:AP

The SDF's offensive,which began at the end of May,aims to remove Islamic State from areas it controls along the Turkish border.

The Manbij operation in which US special forces have played a significant role on the ground marks the most ambitious advance by a group allied to Washington in Syria since the United States launched its military campaign against Islamic State two years ago.

Manbij has been strategically important to the militants as a conduit for transit of foreign jihadists and provisions coming from the Turkish border.

Reuters pictures showed residents being released from an Islamic State-held neighbourhood on Friday and being welcomed by SDF forces.

Syrian citizens gathered near burned cars after airstrikes hit Manbij,in Aleppo province,Syria.Credit:AP

Kurdish sources and the Syrian Observatory for Human Rights,which monitors Syria's five-year-old conflict,later said about 500 cars had left Manbij carrying Islamic State members and civilians. They were heading northeast towards Jarablus,a town under Islamic State control on the Turkish border,the observatory said.

The convoy carried the final Islamic State members leaving the city,under an agreement between the fighting parties that would not be announced officially,Kurdish sources and the monitor said.

The SDF said it had been avoiding a large-scale assault inside Manbij out of concern for civilians.

Dozens of civilians,including children and women from Manbij who had fled the city at the height of the aerial strikes,were killed in suspected US coalition air strikes last month,residents and monitors said.

US officials have said once the Manbij operation was completed,it would create the conditions to move on the militant group's de facto capital of Raqqa where US officials anticipate a tough battle.

Reuters