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A boy carries a baby as they flee their home. REUTERS/Erik De Castro

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ERBIL, Iraq (Reuters) - Iraqi forces said they were about to complete the encirclement of Islamic State's stronghold in the Old City of Mosul, after taking control of a neighbouring district on Thursday.

Iraq's military said it had captured Bab Sinjar, north of the historic, densely-populated district where the militants launched their cross-border "caliphate" in 2014.

Government forces and their allies still have to take full control of Medical City, a complex of hospitals further north along the bank of the Tigris, to enclose the militant enclave.

The offensive to retake the northern city started in October with air and ground support from a U.S.-led international coalition.

Iraqi government forces retook eastern Mosul in January then a month later began the offensive on the western side where bout 200,000 civilians remain trapped behind Islamic State lines.

The fall of Mosul would, in effect, mark the end of the Iraqi half of the "caliphate" that Islamic State leader Abu Bakr al-Baghdadi declared in a speech from a historic mosque in the Old City.

About 800,000 people, more than a third of the pre-war population of Mosul, have already fled, seeking refuge with friends and relatives or in camps.

Kurdish forces backed by U.S.-air strikes are also besieging Islamic State forces in the city of Raqqa, the militants' de facto capital in neighbouring Syria.

(Reporting by Maher Chmaytelli; Editing by Andrew Heavens)

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