BAGHDAD - The United Nations launched an appeal on Sunday for $861 million in international humanitarian assistance to help millions of people in Iraq who are suffering from war and displacement.

Violence including the devastating war with the Islamic State militant group has displaced 3.3 million Iraqis in the past two years, while some 250,000 Syrians have fled to Iraq to escape the war in their country.

"We want to use this money to reach 7.3 million people. These are the most vulnerable people in Iraq," UN humanitarian coordinator for Iraq Lise Grande told a Baghdad news conference.

"Our top priority is to get to the people who are in the most trouble and to give them what they need in order to survive - food, cash, shelter, water," Grande said.

Plunging oil prices have drastically reduced oil revenue which Iraq relies on for the vast majority of its funds, meaning that Baghdad cannot afford to cover the cost of addressing the humanitarian crisis.

"The government has its back against the wall because the price of oil is so low, and that's why we're asking the international community to be generous," said Grande.

The Islamic State group overran large areas north and west of Baghdad in 2014, and Iraqi forces are battling to push the militants back.

The already huge number of displaced Iraqis is expected to increase further in 2016 as Iraqi forces fight to retake areas in Anbar and Nineveh provinces. "Depending on the intensity of fighting and the scale of violence in the months ahead, 11 million Iraqis, perhaps even 12 to 13 million, may need some form of humanitarian assistance by the end of 2016," the UN says.

"More than 500,000 people are expected to flee their homes during the year, the majority from towns and districts along the Mosul and Anbar corridors," it says in a humanitarian response plan for the year.

"Perhaps an additional 1 million will be impacted by the battle for Mosul," the plan says, referring to Iraq's second city that is the militants' main hub in the country.

Meanwhile, Iraqi militiamen abducted and killed civilians following bombings earlier this month, actions that may constitute war crimes, Human Rights Watch said on Sunday.

Paramilitary forces have been repeatedly accused of abuses including summary executions, kidnappings and destruction of property in the course of the war against the Islamic State militant group.

Following January 11 bombings claimed by IS in Muqdadiyah, a town northeast of Baghdad, militiamen attacked "Sunnis as well as their homes and mosques, killing at least a dozen people and perhaps many more," HRW said, citing local residents.

"Again civilians are paying the price for Iraq's failure to rein in the out-of-control militias," Joe Stork, HRW's deputy Middle East director, said in a statement.

Killing civilians, looting and unjustified destruction of property during an armed conflict "are serious violations of international humanitarian law" and "may amount to war crimes," the rights group said.

Iraq turned to Shia militia forces in 2014 to help counter an IS onslaught that overran large areas north and west of Baghdad, and they played a key role in halting the militant advance and later pushing them back.

But they have also carried out repeated abuses during the conflict that ultimately feed mistrust of the government and are harmful to Baghdad's efforts to reassert and maintain control in recaptured areas.