* Somali refugees in Kenya face humanitarian disaster

* Charity expects 100,000 new arrivals this year

* Fears of cholera, women and children most at risk

NAIROBI, March 27 (Reuters) - Hundreds of thousands of Somali refugees holed up in northern Kenya face a "humanitarian emergency" this year as disease starts spreading through overcrowded camps, Oxfam warned on Friday.

More than 250,000 people live in Dadaab's three sprawling camps and Oxfam said 100,000 more are expected to arrive before the end of the year as al Shabaab, a pro-al Qaeda Islamist insurgent group, battles Somalia's fragile new government.

The aid agency said an assessment of the camp had uncovered "a serious public health crisis caused by a lack of basic services, severe overcrowding and a chronic lack of funding".

It said illnesses including cholera would run rampant through the settlements unless urgent steps were taken.

"Conditions in Dadaab are dire and need immediate attention. People are not getting the aid they are entitled to," said Philippa Crosland-Taylor, head of Oxfam GB in Kenya.

Dadaab's refugees live in shacks made from branches and plastic sheeting in one of the world's largest refugee camps.

Oxfam said half the people there have inadequate access to water and sanitation. More than 20 recent cases of cholera have been confirmed at the camps in arid eastern Kenya.

Aid workers say the humanitarian situation in Somalia is the worst in the world. Fighting has killed more than 17,000 civilians since the start of 2007, one million more have been driven from their homes and about a third of the population -- more than 3 million people -- need emergency food aid.

Oxfam said more land needed to be set aside for Somali refugees who fled over the border into Kenya, and more money devoted to improve their living conditions once they got there.

Kenya closed its long, porous desert border with the failed Horn of Africa state after the U.S.-backed defeat of an Islamic Courts group in Jan. 2007.

But Oxfam said the closure had failed to stem a rising tide of people trying to escape the bloodshed as al Shabaab tightens its grip on large swathes of central and southern Somalia.

The move has actually increased health risks, the charity warned, because frontier clinics were shut down and now refugees no longer get any check-up before arriving at the camps.

"The Kenyan government must address this humanitarian crisis, rather than ignoring it," Crosland-Taylor said.

Al Shabaab is the main stumbling block for Somalia's new president, Sheikh Sharif Ahmed, who is trying to restore peace and stability after 18 years of civil war. (Editing by Daniel Wallis)