The advance on Mosul, the biggest city held by the militant group also known as ISIL, could begin as soon as next month.

"We are now in a position where ISIL here in Iraq is increasingly on the run and on the ropes, and the urgent work ahead is to complete that effort. And Mosul, of course, is the big piece ahead of Iraq and ahead of us," Deputy Secretary of State Antony Blinken told reporters in Baghdad.

On a visit to discuss planning for the offensive with Prime Minister Haider al-Abadi and other officials, he said the money would be used to pre-position emergency food and relief supplies.

The United Nations expects up to 1 million people could flee their homes in Mosul, the group's de facto Iraqi capital. Critics say preparations for the humanitarian and political fallout have not kept pace with military gains.

The additional aid brings US humanitarian assistance to more than US$1 billion since 2014, when a US-led coalition started bombing Islamic State in Iraq and neighboring Syria as well as providing training and advice to Iraq's security forces.