Libyan commander Khalifa Haftar has announced the liberation of the city of Derna from the al-Qaeda-linked militants.
"We proudly announce the liberation of Derna, a city dear to all Libyans," said Marshal Haftar in a televised speech on Thursday.
A spokesman for Haftar's self-styled Libyan National Army (LNA) said the group’s forces stormed the last stronghold of the “al-Quaeda organization” in the city centre.
The liberation followed heavy clashes and airstrikes in Derna, the only city in the eastern region beyond Haftar's control, military sources said.
Retaking Derna, a coastal town of nearly 150,000 people in the west of border with Egypt, marks an important step for the LNA as it tries to consolidate its power in the region.
The LNA is among the main factions vying for power since the 2011 NATO-led invasion, which toppled longtime leader Muammar Gaddafi, and left a power vacuum in the North African oil-rich country.
The LNA claimed earlier it regained control of the oil crescent region, days after it retook Ras Lanuf and al-Sidra, through which Libyan oil is transported abroad.
Haftar said all future revenues from the terminals under his control would be handed over to the unrecognised administration running eastern Libya.
The decision to hand control of the eastern export terminals to Benghazi, instead of the internationally recognized state oil firm, dealt a blow to international efforts to preserve Libya’s unity through the UN-backed Tripoli-based Government of National Accord (GNA).
Libya has been torn apart by the conflict since the 2011 NATO-led invasion, with rival governments and armed groups vying for power and share of the country’s oil wealth.