Baghdad says troops have completely surrounded the ISIL stronghold after months of deadly fighting.

Iraq’s army said it encircled the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group’s stronghold in the Old City of Mosul on Tuesday after taking over an area to the north of the densely populated historic district.

The army’s 9th armoured division seized al-Shifaa district, which includes the city’s main hospitals, alongside the western bank of the Tigris river, a military statement said.

The fall of Shifaa means the Old City in the eastern half of Mosul is now surrounded by US-backed government forces.

The battle for the Old City is becoming the deadliest in the eight-month old offensive to capture Mosul, ISIL’s de facto capital in Iraq and the largest city the group came to control in the country.

Aid organisations are expressing alarm at the situation of more than 100,000 civilians, half of whom are children, trapped in its old fragile houses with little food, water and medicine and no electricity.

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The International Committee of the Red Cross said on Monday sick and wounded civilians escaping through ISIL lines were dying in “high numbers”.

The group’s fighters are moving stealthily in the Old City’s maze of alleyways and narrow streets, through holes dug between houses, fighting back advancing troops with sniper and mortar fire, booby traps and suicide bombers.

They have also covered many streets with cloths to obstruct air surveillance, making it difficult for the advancing troops to hit them without a risk to civilians.

The Iraqi army estimates the number of ISIL fighters at no more than 300, down from nearly 6,000 in the city when the battle of Mosul started on October last year.

The fall of Mosul would, in effect, mark the end of the Iraqi half of the “caliphate” that ISIL leader Abu Bakr al-Baghdadi declared three years ago and which once covered swaths of Iraq and Syria.

The Iraqi government initially hoped to take Mosul by the end of 2016, but the campaign took longer as the group reinforced positions in civilian areas to fight back.

About 850,000 people, more than a third of the prewar population of the northern Iraqi city, have fled, seeking refuge with relatives or in camps, according to aid groups.