Iraqi forces on Sunday launched an assault to retake Mosul's Old City and push out the Islamic State group, three years after the jihadists seized the city and announced their "caliphate".

"The army, counter-terrorism forces and federal police launched an attack on the Old City," Staff Lieutenant General Abdulamir Yarallah said in a statement.

Staff Lieutenant General Abdulwahab al-Saadi, a senior commander with the Counter-Terrorism Service, confirmed the "start of the assault on the Old City".

Iraqi forces backed by air strikes from a US-led coalition are pressing an offensive to retake the Old City on the west side of the city from the jihadists.

"The initial air strikes started at around midnight. The security forces started storming parts of the Old City at dawn," an officer with Nineveh operations command said.

Machinegun fire crackled and plumes of smoke from missiles rose above the Old City.

But across the Tigris river, on Mosul's east bank, life went on almost as usual as shoppers, students and workers pushed through traffic jams.

Taking back the Old City, a densely populated warren of narrow alleyways on the western side of Mosul, is crucial to recapturing the whole of the former IS bastion.

Iraqi forces launched the battle for Mosul in October, retaking the eastern part of the city in January and starting the operation for its western part the next month.

- 100,000 civilians trapped -
The United Nations said Friday that IS may be holding more than 100,000 civilians as human shields in the Old City.

The UN refugee agency's representative in Iraq Bruno Geddo said IS had been capturing civilians and forcing them into the Old City.

"More than 100,000 civilians may still be held in the Old City," Geddo told reporters in Geneva.

"We know that ISIS moved them with them as they left... locations where the fighting was going on," he said, using another acronym for IS.

"These civilians are basically held as human shields in the Old City."

With virtually no food, water or electricity left in the area, the civilians are "living in an increasingly worsening situation of penury and panic", he said.

"They are surrounded by fighting on every side."

Since the battle to retake Mosul began nine months ago, an estimated 862,000 people have been displaced from the city, although 195,000 have since returned, mainly to the liberated east of the city.

IS overran Mosul and swathes of Iraq and Syria in 2014, declaring a self-styled "caliphate" over areas it ruled.

The fall of Mosul was the worst defeat that Iraqi forces suffered in the war with IS, and regaining it would cap a major turnaround for security forces, who broke and ran despite outnumbering the jihadists who attacked the second city in 2014.

The Iraqi security forces have since recaptured much of the territory seized by IS, including three cities, and have retaken most of Mosul, the fourth and largest.

IS is also under pressure in its last Syrian stronghold, Raqa, where US-backed Kurdish-Arab forces have also been advancing in an offensive to retake the city.