* First movement of front line in months

* Offensive aimed at securing Kurdish territory

* Kurdish peshmerga have become important U.S. ally

(Adds security council statement)

ERBIL, Iraq, Aug 26 (Reuters) - Kurdish forces backed by U.S.-led coalition air strikes drove Islamic State militants out of 10 villages in Iraq's Kirkuk province on Wednesday in an offensive to secure their territory in the north, Kurdish military sources said.

The assault began at dawn in the Daquq area, around 175 km (110 miles) north of the Iraqi capital Baghdad. By evening, Kurdish forces had taken an area of around 24 square km, the sources said.

The Kurdistan region's Security Council said up to 2,000 peshmerga had participated in the attack and dozens of ISIL fighters were killed.

An aide to a Kurdish commander taking part in the offensive said five peshmerga had been killed, most of them by improvised explosive devices.

The frontline between Kurdish peshmerga forces and Islamic State in northern Iraq has hardly budged for months.

The Kurds already control most of the territory they claim as their own, and have little incentive to push further into predominantly Sunni Muslim Arab towns and villages, except where they pose a direct threat to their region.

"This area (near Daquq) posed a danger to the main road from Kirkuk to Baghdad and the Kurdish and other villages adjacent to the areas occupied by Daesh," Brigadier General Aras Abdel Rahman said, using an Arabic acronym for Islamic State.

The peshmerga have emerged as an important ally for the United States in its aerial campaign against Islamic State.

"International coalition warplanes targeted dozens of ISIL fighting positions from 2200 hrs 25 August in preparation for the ground offensive and provided air support throughout the operation," the security council said in a statement.

Together they have pushed back the Sunni insurgents in northern Iraq, and the peshmerga has thus expanded the territory of its autonomous region.

Last summer, the Kurds took full control of the disputed city of Kirkuk after the Iraqi army abandoned its bases there, but western parts of the province such as Hawija remain under Islamic State control.

The Kurds have since carried out several offensives aimed at creating a buffer around the oil-rich city, which they say they will never relinquish.

(Reporting by Isabel Coles,; Editing by Raissa Kasolowsky and Angus MacSwan) ((isabel.coles@thomsonreuters.com; +964 790 191 7024; Reuters Messaging: isabel.coles.reuters.com@reuters.net))

Keywords: MIDEAST CRISIS/IRAQ KURDS