Retreating Islamic State forces in Mosul are setting oil wells ablaze to slow the advance of Iraqi forces, charity Oxfam has said, according to Sky News.

The UK charity said thousands of families are forced to live in what it called a "smoke-filled hell" with scant access to clean water in villages and towns around Mosul.

U.S.-backed Iraqi and Kurdish forces have been closing in on Mosul since they launched an offensive last month to recapture Iraq's second-largest city and last IS stronghold in the country.

Oxfam said IS set 19 oil wells on fire in the Qayarrah area, south of Mosul, as they were pushed northwards by Iraqi forces.

"The fires have produced clouds of thick black smoke and fumes across an area larger than Greater London," the charity said.

Oxfam quoted a 67-year-old man as saying the burning of oil wells were making residents sick.

"We need someone to put out the fires. They have been burning for several months now," he reportedly said.