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Islamic State group militants are preventing civilians from leaving besieged Mosul with residents being used as human shields amid an intense Iraqi offensive on the city, the US has warned.

The Mosul offensive has the potential for "significant" displacement in the city with the first signs of already being seen in eastern Syria.

This comes despite IS militants threatening "death" to those who flee the city.

Fear amid threats

Pentagon spokesman Navy Captain Jeff Davis said IS have effectively kept Mosul's 1.5 million residents captive during the weeks building up to the offensive.

An increase in air strikes and artillery barrages will add further dangers and woes to civilians being used as human shields.

"We know they are being used as human shields, absolutely," Davis said.

"They are being held there against their will. We have not seen any change in the last day of people leaving or fleeing."

Obama has already warned of "significant" displacement in the coming weeks, saying the UN and other aid groups were ready to respond.

"We have put together plans and infrastructure for dealing with a potential humanitarian crisis that are as extensive as the military plans," Obama told reporters.

UN spokesman Stephane Dujarric said an estimated 200,000 people are expected to be displaced in the first weeks of the offensive.

There are fears the figure could rise to one million displaced making it one of the single most devastating humanitarian events in recent years.

We have put together plans and infrastructure for dealing with a potential humanitarian crisis that are as extensive as the military plans. - US President Barack Obama

For now, residents of Mosul trickling into eastern Syria have been in their hundreds, not thousands. This could be due to IS' enforcing tight security on exits out of the city and issuing blood curdling threats of punishment to "deserters".

The US-led coalition and Iraqi authorities have already told civilians to stay put, fearing they could be executed if caught.

On the prowl

IS militants have been prowling the city, looking for signs of dissent, with an upsurge in public killings of alleged spies, and perhaps a warning to other residents who might be thinking of defying the group.

Fighters have been reportedly brandishing scissors in public spaces, warning residents they will cut out tongues if they hear talk of "liberation".

One resident in Mosul told The Guardian about the level of fear in the city.

"Everyone is staying at home because we don’t know what else to do. Daesh [another name for Islamic State] are mostly moving around on motorbike and have small and heavy guns," he told the UK paper.

IS have been resorting to desperate measures to slow the rolling offensive from mostly Kurdish fighters.

Davis said they have ignited giant pits full of oil and tires to so a thick layer of smog hangs over the city.

It is hoped it will make it harder for coalition aircraft to gather intelligence of conduct air strikes, but overall, the situation is good for the anti-IS forces.

"We've seen very good progress," he said. "It's going to be a while. There's a lot of movement they have to do to get in (to Mosul) but it's very much under way."

IS fighters have deployed suicide bomb attacks to slow the advance but there are fears the battle could intensify inside Mosul.

They have had two years to dig in, build tunnels and booby trap countless roads and buildings, but ultimately, it appears to be just a matter of time before Mosul falls.

Agencies contributed to this story.