A major shortage of aid funding for Iraq threatens food assistance relied on by more than two million people, the UN's humanitarian coordinator for the country said on Sunday.

The Islamic State jihadist group overran around a third of Iraq last year, sparking a conflict that has displaced millions of people, causing a major humanitarian crisis.

The "food pipeline, which is keeping more than two million people alive, breaks... in October. We've got about eight weeks before it breaks," Lise Grande told AFP in Baghdad.

"The food pipeline right now provides supplemental support to families that are food insecure. So what we would expect to see when that pipeline breaks is that food insecurity... is going to increase, there's no question about this, dramatically," Grande said.

On June 4, the United Nations launched an appeal for half a billion dollars to tackle the spiralling humanitarian crisis in Iraq, where conflict has displaced more than three million people since the start of 2014.

"Of the $500 million that we asked for, more than $100 million has been received to date," and other countries have said that they want to help, said Grande.

"We're confident that tens of millions more dollars will be coming, but by our own calculation, we're still only halfway there," she said.

And $500 million is the absolute bare minimum required: "We presented the most pared to the bone humanitarian appeal that had ever been launched in this region," Grande said.

The lack of funds has already taken a toll on aid programmes, causing 184 of 220 frontline healthcare programmes to be shuttered.

"We estimate that a million people who would have been receiving some kind of support are not going to be because we've had to close these programmes. It's devastating," Grande said.