* PM aims to retake big city from Islamic State by year-end

* Most of the 560 new troops to work out of Qayara air base

* It's the second such force increase in under three months

* U.S. will help turn damaged air base into logistics hub (Adds more from Carter, debate on Mosul operation, Congress)

By Yeganeh Torbati and Stephen Kalin

BAGHDAD, July 11 (Reuters) - The United States is stepping up its military campaign against Islamic State by sending hundreds more troops to assist Iraqi forces in an expected push on the city of Mosul, the militants' largest stronghold, later this year.

U.S. Defense Secretary Ash Carter made the announcement on Monday during a visit to Baghdad, where he met U.S. commanders, as well as Iraqi Prime Minister Haider al-Abadi and Defence Minister Khaled al-Obeidi.

Most of the 560 additional troops will work out of Qayara air base, which Iraqi forces recaptured from Islamic State militants and plan to use as a staging ground for an offensive to retake Mosul, Iraq's second biggest city.

Government forces said on Saturday they had recovered the air base, about 60 km (40 miles) from the northern city, with air support from the U.S.-led military coalition.

"With these additional U.S. forces I'm describing today, we'll bring unique capability to the campaign and provide critical support to the Iraqi forces at a key moment in the fight," Carter told a gathering of U.S. troops in Baghdad.

The new troops were "ready to come" and it would be a matter of "days and weeks, not months," he said.

Abadi has pledged to retake Mosul by the end of the year.

TIMING

However, there is still debate in Washington about the timing of a move on Mosul.

Some U.S. and allied military and intelligence officials warn that aside from its elite counterterrorism force, the Iraqi military is not ready to take on Islamic State militants in Mosul without significant assistance from the Kurdish peshmerga and Shi'ite militias.

Moreover, Baghdad and Arbil, the capital of the autonomous Kurdish region, do not appear to have agreed on a plan for Mosul, and any significant participation by Kurdish or Shi'ite forces in a Mosul campaign, one U.S. official said, "would create a whole new set of problems that the Abadi government is incapable of managing, or even mitigating."

Separately, the Republican chairman of the House of Representatives Armed Services Committee said on Monday that President Barack Obama must ask Congress for additional funds to pay for the deployment of more troops to Iraq, as Congress and the White House debate defense spending amid mandatory budget cuts.

LOGISTICS HUB

Still, the latest U.S. force increase comes less than three months after Washington announced it would dispatch about 200 more soldiers to accompany Iraqi troops advancing towards Mosul.

Carter told reporters ahead of Monday's trip that the United States would now help turn Qayara into a logistics hub.

The airfield is "one of the hubs from which ... Iraqi security forces, accompanied and advised by us as needed, will complete the southernmost envelopment of Mosul," he said.

Lt. Gen. Sean MacFarland, commander of the coalition against Islamic State militants in Syria and Iraq, said the additional troops would fill a variety of roles.

"(They are) coming in to help expand the base at Qayara West airfield into a node that can support the Iraqi security forces as they move forward with the Mosul operation, and it'll be an operational air base."

U.S. forces have already visited Qayara to check on its condition, and advisors can offer specialised engineering support in Mosul, where Islamic State has blown up bridges across the Tigris, U.S. officials said.

Iraqi forces were already improving the base's perimeter in case of a counterattack from the nearby town of Qayara, which Islamic State militants still hold, another U.S. official in Baghdad said.

The recapture of Mosul, Islamic State's de facto Iraqi capital, from which its leader declared a modern-day caliphate in 2014, would be a major boost for the plans by Abadi and the United States to weaken the militant group.

NO FOLLOW-UP PLAN

Still, retaking Mosul without a plan to restore security, basic services and governance and the money and personnel to implement it immediately would repeat the mistake the Bush administration made in 2003, by ousting Saddam Hussein with no plan for installing a new government, said three officials from the U.S. and Britain.

And as Islamic State militants have lost part of their self-proclaimed caliphate in Iraq and Syria, they increasingly have turned to suicide attacks. These included a bombing in the Iraqi capital last week that left nearly 300 people dead, the most lethal bombing of its kind since the 2003 U.S.-led invasion.

U.S. and Iraqi officials have touted such bombings as proof that battlefield setbacks are weakening Islamic State, but critics say a global uptick in suicide attacks attributed to the group suggests the opposite.

"In fact, it demonstrates (Islamic State's) strength and long-term survival skills," terrorism expert Hassan Hassan wrote in a recent article. "The threat is not going away." (Additional reporting by John Walcott and Patricia Zengerle in Washington; Editing by Mark Heinrich and Bernadette Baum)

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