Rare aerial footage released by the International Committee of the Red Cross (ICRC) has revealed incredible destruction in the Iraqi city of Ramadi.

Key points: Ramadi was once a city of 375,000 people but many are now too afraid to return to home

Ramadi was once a city of 375,000 people but many are now too afraid to return to home ICRC says it will take months, if not years, to make the city safe again

ICRC says it will take months, if not years, to make the city safe again Iraqi forces claim to have liberated 70 per cent of areas taken by Islamic State

The haunting drone video reveals Ramadi, once a city of 375,000 people, to be a ghost town.

Row after row of houses have been completely destroyed, the streets empty and abandoned in the once prosperous town.

The ICRC said explosive remnants remained scattered across the city and most people were too afraid to return to home.

According to the ICRC, it will take months, if not years, to make the city safe again and to rebuild homes and damaged water and electric systems.

US-backed Iraqi forces took the city back from Islamic State in December, after heavy fighting that saw thousands of civilians trapped and held as human shields by IS.

Iraqi officials have reported finding two mass graves in Ramadi, containing the bodies of about 40 people killed by IS militants.

'Millions on the move; families torn apart'

ICRC president Peter Maurer said the levels of suffering in Iraq and neighbouring Syria had reached unprecedented levels.

"Hundreds of thousands killed; millions on the move; families torn apart," Mr Maurer said.

"Even as Ramadan comes to an end, many, many ordinary people are living in abject fear and terrifying uncertainty. A humanitarian catastrophe is unfolding."

The full extent of the damage in Ramadi comes as Iraqi forces claim to have successfully liberated 70 per cent of the overall areas that had been taken over by IS.

The Iraqi Government said once it had retaken the Al Anbar Province, of which Ramadi is the capital, the focus would move to retaking Mosul, the largest city held by IS.

"After the Iraqi Government completely recaptures the entire Al Anbar Province and relieves the threat in the western area of Iraqi's capital Baghdad, the entire armed forces will face redeployed into other regions," Iraqi national security adviser Faleh al-Fayad said.

Relatives mourn victims of Baghdad bombing

Men carry a coffin in Najaf during a funeral for the victims of a suicide bombing in Baghdad. ( AFP: Haidar Hamdani )

The death toll from an attack on a shopping district in Baghdad on the weekend has risen to more than 200, fuelling calls for security forces to crack down on IS sleeper cells blamed for one of the worst ever single bombings in Iraq.

Numbers rose as bodies were recovered from the rubble in the Karrada area of Baghdad, where a refrigerator truck packed with explosives blew up on Saturday night, while people were out celebrating the holy month of Ramadan.

At least 213 people were killed in the attack, and more than 200 more were wounded, according to officials.

Mourning relatives of the victims carried coffins covered in Iraqi flags to the cemetery and mosque in Najaf.