* ISIL jihadists hold wide areas of north, west Iraq
* Many displaced people living in open, UN says
* Outbreaks of measles and diarrhoea feared
* Insecurity, depleted fuel stocks hamper aid
* Red Cross says Falluja remains a 'battleground' (Adds statement by Red Cross)
By Stephanie Nebehay
GENEVA, June 20 The United Nations said on Friday it was expanding aid to a million people driven from their homes as Islamist militants seized wide tracts of northern and western Iraq.
Many families are living in the open, in urgent need of food, water, shelter and latrines, said Jacqueline Badcock, the United Nations resident and humanitarian coordinator in Iraq.
"Humanitarian agencies are rapidly scaling up in the face of this unfortunate challenge," she said in a statement that appealed for access to thousands of displaced in areas held by armed factions, including the radical Islamic State of Iraq and Levant (ISIL).
Insecurity and depleted fuel stocks are hampering efforts to deliver supplies, amid fears of outbreaks of measles and diarrhoeal diseases, U.N. aid agencies said.
Around 500,000 people who fled the northern city of Mosul after ISIL overran it 10 days ago have found refuge in the nearby Kurdish autonomous zone and adjoining areas in Nineveh province now largely under jihadi Islamist control.
Roughly the same number have been uprooted by fighting in Iraq's vast western province of Anbar, where Sunni Muslim jihadi militants largely hold the main towns of Falluja and Ramadi.
"The city of Falluja has remained a battleground between armed groups and the Iraqi armed forces. It has suffered extensive loss of life and major damage to homes, hospitals, schools and water installations," the International Committee of the Red Cross (ICRC) said in a statement. "Many remain without food, water, health care or adequate shelter."
Thousands have been killed in violence across Iraq since December, the ICRC said. This month, it has delivered enough wound-dressing materials for 500 patients to Falluja's main hospital and for 550 patients to three other hospitals in Iraq.
The ICRC has also distributed rations to more than 31,000 displaced from Mosul and plans an airlift of goods to Erbil.
"Right now, it's a chaotic situation," Adrian Edwards of the U.N. refugee agency UNHCR told a news briefing in Geneva. "You've had very large numbers of people who have moved across. They are trying to find accommodation, trying to exist on the funds they have, and we are trying to get help to them."
"Clearly, new displacement in this region, which is under immense strain, is the last thing that we need at the moment."
More than 2.8 million Syrian refugees have already flooded into neighbouring countries from their country's three-year-old civil war. Nearly 225,000 of them fled into Iraq, according to the UNHCR.
Iraqi forces were massing north of Baghdad on Friday, aiming to strike back at ISIL, whose lightning offensive towards the capital has prompted the United States to send in military advisers to stiffen government resistance.
SHORTAGES OF MEDICINES
Health officials in the Kurdistan region of Iraq are reporting critical shortages of medicines after regular deliveries from the central government in Baghdad were interrupted, the World Health Organization said.
The WHO has provided medical supplies for mobile clinics as well as trauma kits to treat 200 wounded, emergency health kits for 20,000 people, and supplies to treat diarrhoeal diseases, spokeswoman Fadela Chaib said.
Some sick or wounded are unable to get treatment, said Patrick Youssef, head of the ICRC delegation in Iraq.
"People are not always able to obtain the care they require in hospitals because medical staff cannot work in safety," Youssef said. "Many hospital personnel have fled because of the danger, and there is a shortage of medicines."
Power cuts due to system breakdowns or fuel shortages have added to the misery and limited the water supply, he said.
The World Food Programme (WFP) said that seven trucks had delivered 175 metric tonnes of food to its warehouse in the Kurdistan city of Arbil, where its operations are expanding.
"Reaching IDPs (internally displaced persons) who are constantly on the move, often in insecure areas, will also present significant challenges for WFP and the humanitarian community," WFP spokeswoman Elisabeth Byrs said.
A U.N. appeal for $105 million to help Iraqis displaced from Anbar is being revised, as more funds are needed to cope with the wider crisis following ISIL's offensive, Jens Laerke of the U.N. Office for the Coordination of Humanitarian Affairs said. (Editing by Larry King)