BAGHDAD - Iraqi lawmakers on Thursday voted to impeach Defence Minister Khaled al-Obeidi over corruption allegations, MPs said.

Obeidi lost a no confidence vote by 142 to 102 in a secret ballot, while 18 abstained, two members of parliament told AFP.

The vote removes one of Prime Minister Haider al-Abadi's key Sunni allies from government and comes as Iraqi forces ramp up preparations for an offensive against Mosul, the Islamic State group's last major stronghold in the country.

The shock impeachment is the latest development in a bitter feud that erupted this month between Obeidi and parliament speaker Salim al-Juburi, the highest-ranking Sunni politician in Iraq.

Obeidi was questioned in parliament over corruption allegations to which he answered with accusations of his own implicating Juburi and several MPs.

Juburi moved quickly and agreed to have his immunity lifted so that he could be investigated, only for a special integrity court to drop the case hours later.

Obeidi had said the accusations against him were trumped up and retaliation for his refusal to buy in to corrupt defence deals.

"I tried to fight corruption in every way but it appears that its lords are stronger and their voices louder," he said in a statement after the vote.

He then made a thinly-veiled reference to Nuri al-Maliki, the powerful former prime minister who many observers suspect of manoeuvering behind the scenes to undermine every move Abadi and his allies make.

"I spared no effort in building the army... whilst striving to fight the corruption and nepotism that led Iraq to lose 40 percent of its territory in 2014, displaced millions of people, threatened its shrines as well as its beloved capital Baghdad," Obeidi said.

Maliki had been premier for eight years when the army, gangrened by nepotism and hollowed out by a system in which "ghost soldiers" enrolled but did not show up for duty, collapsed completely in the face of a vast June 2014 IS assault.

Alia Nasayif, one of the MPs accused of corruption by Obeidi and a vocal Abadi critic, welcomed the outcome of Thursday's vote.

"What happened today restored the prestige of the Iraqi state. It's the first time that parliament takes action and uses its authority to remove a corrupt minister," she said.

She dismissed any suggestion that the defence minister's impeachment could affect the war effort.

"The battle is being led by real commanders at the joint command and his exit won't have much impact. He is not a minister who fights Daesh (IS), he's a corrupt minister," Nasayif told AFP.

Jassem Hanoun, an Iraqi political and security analyst, disagreed and argued the timing could not be worse.

"What happened today is a negative development, especially in terms of timing," he said.

"It will have a direct impact on the battle since the ministry will be run by the deputy, who has limited authority," Hanoun said.