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Millions of Iraqis displaced by sectarian conflict are still struggling to get sufficient food, shelter and basic services like water and health care, the International Organisation for Migration (IOM) said.

In a mid-year review distributed late on Thursday, the Geneva-based aid agency said fewer Iraqis were fleeing their homes, but the roughly 2.8 million Iraqis who were already internally displaced faced worsening living conditions.

Nearly three quarters of them were unable to access regularly the government food rations they depend on, one third could not get the medicines they needed and 14 percent had no access to health care at all.

"The deteriorating conditions facing ... (Iraq's) internally displaced persons (IDPs), as well as the limited returnee population, remain one of the most serious humanitarian crises in the world," the IOM said.

It added that although the rate of displacement had slowed sharply and some refugees were coming home, most were still too terrified of sectarian attacks to consider returning.

"Some face increasing rent prices, others squat in public buildings fearing eviction, or live in simple mud huts."

Many of those who returned faced conditions at least as miserable as they experienced when displaced. Around 40 percent of displaced Iraqis had tried to come back home, only to find their property occupied or destroyed, the report said.