DAQUQ, October 17 (Reuters) - Shi'ite irregulars will help storm a smaller city in northern Iraq while government troops launch their upcoming offensive against Islamic State's biggest stronghold Mosul, raising fears among Iraqi officials and aid workers of sectarian retribution. The decision to steer the Popular Mobilisation Forces away from Mosul to Hawija 100 km (60 miles) away is intended to ease sectarian animosity during the fight for Mosul, expected to be the biggest battle in Iraq since the U.S.-led invasion of 2003. The PMF units, formed from Shi'ite militia groups who now have official status from Baghdad, have been accused by the United Nations and others of carrying out killings and kidnappings in some other areas freed from Islamic State. Their presence at the frontline is often bitterly resented by Sunni civilians in Sunni-majority areas the government hopes to free from Islamic State control, and authorities want to keep them off the battlefield in Mosul. But they are also battle-hardened fighters with powerful supporters in Baghdad, and keeping them out of the fight altogether would be politically difficult. A senior diplomat who has followed the planning for the assault on Mosul said the compromise to send the PMF to Hawija instead was the result of tough negotiations. “I don’t think that was an easy agreement,” said the senior diplomat, giving details that were not public on condition of anonymity. “There was a lot of leaning and a lot of heavy lifting by a lot of people.” But the diplomat acknowledged that the compromise had caused concern about abuses being carried out in the smaller city. “We’re really worried,” the diplomat said. The PMF says civilians in Hawija have nothing to fear. “Our role will be liberating them from Daesh tyranny,” said Ali al-Hussaini, a PMF spokesman, using an Arabic acronym for Islamic State. “We will make sure to save the families from any harm and preserve their dignity. We are their brothers, we are not an enemy.” FLEEING UNDER FIRE Mosul, with a pre-war population of around 2 million, is five times bigger than any other city Islamic State militants have held, and the battle for it is seen as an existential fight for the group's self-proclaimed caliphate in Iraq. Hawija, with around 200,000 people, is an important provincial city in its own right. Residents who have managed to flee say the fighters have imposed draconian rule there, growing increasingly violent as the expected battle looms. “Everyone is trying to escape,” said Um Kamal, a woman in her fifties who swam to safety with her three children across a river in pitch black darkness last Tuesday night as Islamic State fighters fired at them from the shore. A woman nearby was hit by the gunfire but Um Kamal and her family reached territory held by Kurdish security forces. The militants, clearly aware of an impending attack, have become even more brutal in recent weeks, those who flee say: executions take place daily and corpses are hung on light posts as a warning to anyone who challenges the caliphate. Um Yaqoub, another Hawija resident, tried to escape earlier this summer with members of her extended family but they were caught by IS fighters. “They executed my cousin in front of us,” she said. “My kids saw it.” She finally made it to Kurdish-controlled territory on her third escape attempt a month ago. In a single night last week, approximately 800 people escaped Hawija. Many of those leaving are transferred to a camp near the town of Daquq, one of several camps in the region which aid agencies are expecting to fill when the military operations in Mosul and Hawija kick off. “This is the beginning of a massive emergency we are preparing for,” said Maulid Warfa, the head of a United Nations Children’s Fund’s (UNICEF) field office at the Daquq camp, noting that some 200,000 people are expected to be displaced within the first two weeks of fighting in and near Mosul. Aid workers worry that fear of retaliation by Shi'ite fighters could cause more panic and worsen the situation. The United Nations said in July it had a list of more than 640 Sunni Muslim men and boys reportedly abducted by a government-affiliated Shi’ite militia during the battle for the Islamic State-held bastion of Falluja. About 50 others were summarily executed or tortured to death. The PMF have said that there have been individual abuse cases but that it was not systematic and the government has promised to punish anyone involved. Hawija residents have already experienced violence from Shi’ite-led security forces. In 2013, dozens were killed when Iraqi security forces raided an anti-government protest camp in the city, fuelling resentment that residents say eased Islamic State’s takeover of the town the next year. Iraqi officials, aware of the sensitivities of sending Shi’ite fighters into a predominantly Sunni town, are trying to temper the role the PMF will play in Hawija, according to former finance and foreign minister Hoshiyar Zebari. The hope is that more disciplined PMF units will be paired with the Iraqi army to create a sectarian balance in the fighting force. “No one will condone any atrocities,” Zebari said. In past battles, PMF units have not received air support from the U.S.-led coalition that assists the Iraqi army. Some PMF members fought against American troops in Shi'ite militias during the U.S. occupation of Iraq. However, Hussaini, the PMF spokesman, said coalition forces were expected to provide air support and intelligence during the assault on Hawija. Asked about support for PMF units, coalition spokesman Col. John Dorrian said: “It would be appropriate to say we help the Iraqi security forces. As far as the specific disposition of who’s involved there I probably wouldn’t get into that.” Um Kamal, now safely out of Hawija with her family, said she is looking forward to the day she can return. “I want to go back to my house and my life,” she said. “But we are waiting. People are waiting to see what happens with the military operation.”