The Daily Star Sunday has learned the SAS sniper positioned himself in another building around 1,000m away from the target but with a direct line of fire.
He was supported by three colleagues who had prepared around six magazines filled with armourpiercing rounds.
The attack occurred just after first light one day last week.
The marksman fired 30 rounds into the building, causing the wall to partially collapse.
Later that day the SAS and Iraqi forces seized the building and found three dead jihadis.
They were surrounded by maps and communications equipment.
A defence source said: “The armour-piercing rounds had a devastating effect.
“The bodies of the Islamic State fighters had been absolutely pulverized.
“One had been decapitated and another had been cut in half. It was a real scene of carnage – but the tactic had proved incredibly effective.
“The lives of around 20 civilians had been saved.
“The suicide attacks had been stopped and, without any command and control, the Isis fighters had retreated into another part of the city.
“It was a classic SAS operation.”