'Victory' over IS in Mosul imminent as insurgents lines collapse - Iraqi military

MOSUL/ERBIL, Iraq (Reuters) - Iraqi security forces expect to take full control of Mosul in the coming hours as Islamic State's defensive lines collapse in its former de facto capital in Iraq, state television reported on Saturday.

Air strikes and artillery salvoes pounded the jihadists' last bastion in the city as black smoke billowed over it, a Reuters correspondent said.

Some Iraqi soldiers celebrated, dancing with rifles and machine guns and waving the national flag as they reached their assigned targets, without waiting for a formal victory announcement to be made, a Reuters TV crew said.

The mood was less festive, however, among some of the nearly one million Mosul residents displaced by months of fighting, many of whom are living in camps outside the city.

"If there is no rebuilding and people don't return to their homes and regain their belongings, what is the meaning of liberation?" Mohammed Haji Ahmed, an elderly clothing trader, told Reuters in the Hassan Sham camp, east of Mosul.

"We are seeing now the last metres (yards) and then final victory will be announced," a television presenter said, citing the channel's correspondents embedded with security forces battling in Islamic State's redoubt in the Old City of Mosul, by the Tigris river. "It's a matter of hours," she said.

'STATE OF FALSEHOOD'

A military spokesman cited by the TV said the insurgents' defence lines were collapsing. Iraqi commanders say the insurgents are fighting for every metre with snipers, grenades and suicide bombers, forcing security forces to fight house-to-house in the densely populated maze of narrow alleyways.

A U.S.-led international coalition is providing air and ground support to the eight-month offensive to wrest back Mosul.

"The battle has reached the phase of chasing the insurgents in remaining blocks," the Iraqi military media office said in a statement. "Some members of Daesh have surrendered," it added, using an Arab acronym of Islamic State.

Months of urban warfare has displaced 900,000 people, about half the city's pre-war population, and killed thousands, according to aid organisations.

Mosul was by far the largest city seized by Islamic State in its offensive three years ago where the ultra-hardline group declared its "caliphate" over adjoining parts of Iraq and Syria.

Stripped of Mosul, Islamic State's dominion in Iraq will be reduced to mainly rural, desert areas west and south of the city where tens of thousands of people live. The militants are expected to keep up attacks on selected targets across Iraq.

Prime Minister Haider al-Abadi declared the end of Islamic State's "state of falsehood" a week ago, after security forces took Mosul's mediaeval Grand al-Nuri mosque - although only after retreating militants blew it up.

The United Nations predicts it will cost more than $1 billion to repair basic infrastructure in Mosul. Iraq's regional Kurdish leader said on Thursday in a Reuters interview that the Baghdad central government had failed to prepare a post-battle political, security and governance plan.

The offensive has damaged thousands of structures in Mosul's Old City and destroyed nearly 500 buildings, satellite imagery released by the United Nations on Thursday showed.

In some of the worst affected areas, almost no buildings appear to have escaped damage and Mosul's dense construction means the extent of the devastation might be underestimated, U.N. officials said.

(Additional reporting by Isabel Coles in Khazer Camp; Writing by Maher Chmaytelli; Editing by Janet Lawrence and Helen Popper)