While the move appeals to Washington, which wants distance from militias accused of human rights abuses, it will also blunt the offensive capabilities of pro-government ground forces in the battle to retake Tikrit from the Islamic State (IS) jihadist group.
The United States launched its first air strikes in support of the Tikrit operation on Wednesday, sparking the freeze by militia units in the Popular Mobilisation forces, or Hashad al-Shaabi in Arabic, which had repeatedly voiced opposition to American intervention.
Several commanders from the Badr organisation, a militia whose leader Hadi al-Ameri is a senior figure in the Hashed al-Shaabi, said fighters were pulling back but not out of the operation.
"We consider this a break until the coalition issue is resolved," one commander, who gave his name as Baqir, told AFP in Awja, just south of Tikrit.
The Hashed al-Shaabi account for the bulk of the various government and allied forces who have been trying, since March 2, to dislodge diehard IS jihadists holed up in Tikrit.
Baqir said four of the main Iranian-backed Shiite militias in Hashad al-Shaabi -- Badr, Asaib Ahl al-Haq, Ketaeb Hezbollah and Saraya al-Salam -- were all halting offensive operations but would still defend positions around Tikrit.
It was not immediately clear whether others of Iraq's myriad militias were on the same page.
Another Badr commander confirmed the pullback, which he said was a result of "international pressure".
Iran had so far been the most prominent foreign partner in Baghdad's largest operation to date against IS jihadists who swept through Iraq's Sunni Arab heartland nine months ago.
Signup to our newsletter and follow us on Facebook and Twitter!
- Burning houses -
But the operation was stalling, and the Iraqi government eventually requested strikes by the US-led anti-IS coalition to break the deadlock.
The Pentagon conditioned its intervention on an enhanced role for regular government forces and Friday hailed the withdrawal of "those Shiite militias who are linked to, infiltrated by, (or) otherwise under the influence of Iran".
"What remains on the battlefield now are forces that are under direct control of the ministry of defence," Pentagon spokesman Colonel Steven Warren told reporters.
The strikes have angered some Shiite militias, which accuse Washington of "hijacking victory" by sending warplanes more than three weeks into the battle for Tikrit.
Iraq turned to the militias to bolster its flagging forces last year, and they have played a major role in operations that have regained significant ground from IS in areas north of Baghdad.
Fighting continued without them in south Tikrit on Friday near the city's hospital. Bursts of gunfire could be heard from Awja and clouds of smoke from shelling or air strikes rose from the city while warplanes flew overhead.
Black smoke also drifted over Awja itself, where one militiaman admitted that they were setting houses alight.
Smoke poured from the windows of one house, while many others in the town were charred black from earlier fires.
A photo of executed Iraqi dictator Saddam Hussein, who was born in Awja, lay amid the ashes on the floor of one burned home in the town.