* Army facing stiff resistance on southern front of Mosul

* Militants putting up stronger fight as army closes in on city

* Turkey says won't allow Shi'ite militias attack Turkmen town

By Babak Dehghanpisheh and Maher Chmaytelli

QAYYARA/BAGHDAD, Iraq, Oct 26 (Reuters) - Islamic State fighters on Wednesday kept up their fierce defence of the southern approaches to Mosul which has held up Iraqi troops on the southern front and forced an elite army unit east of the city to put its more rapid advance on hold.

Ten days into the offensive, Iraqi army and federal police units are trying to dislodge the militants from villages in the region of Shora, 30 km (20 miles) south of Iraq's second largest city.

The frontlines in other areas have moved much closer to the edges of Mosul, the last major city under control of the militants in Iraq, who have held it since 2014.

The elite army unit which moved in from the east has paused its advance as it approaches built-up areas, waiting for the other attacking forces to close the gap.

"As Iraqi forces move closer to Mosul, we see that Daesh resistance is getting stronger," said Maj. Chris Parker, a coalition spokesman at the Qayyara airbase south of Mosul that serves as a hub for the campaign.

The combat ahead is also likely to get more deadly as 1.5 million residents remain in the city and worst-case United Nations' forecasts see up to a million people being uprooted.

U.N. aid agencies said the fighting has so far forced about 10,600 to flee their homes. Lise Grande, the UN humanitarian coordinator for Iraq, told Reuters on Tuesday that a mass exodus could happen, maybe within the next few days.

In the worst case scenario, Grande said it was also possible that Islamic State fighters could resort to "rudimentary chemical weapons" to hold back the impending assault.

The battle may become the biggest yet in the 13 years of turmoil unleashed by the U.S.-led invasion of Iraq in 2003, and the fall of Mosul would mark the group's effective defeat in Iraq. It was from its Grand Mosque that Islamic State's leader Abu Bakr al-Baghdadi declared a "caliphate" that also spans parts of Syria.

U.S. Defense Secretary Ash Carter said on Tuesday the attack on Raqqa, Islamic State's main stronghold in Syria, would start while the battle of Mosul is unfolding.



SHI'ITE MILITIAS JOINING SOON

A senior U.S. official said about 50,0000 Iraqi ground troops are taking part in the offensive, of which a core force of 30,000 from the government's armed forces, 10,000 Kurdish fighters and the remaining 10,000 from the police and local volunteers.

Iraqi army units are deployed to the south and east, while Kurdish fighters are attacking from the east and the north of the city where 5,000 to 6,000 jihadists are dug in, according to Iraqi military estimates.

Roughly 5,000 U.S. forces are also in Iraq. More than 100 of them are embedded with Iraqi and Kurdish peshmerga forces advising commanders and helping coalition air power in hitting targets. They are not deployed on frontlines.

The attacking forces are set to increase soon when Iranian-trained and backed Shi'ite militias join Iraqi forces.

The militias, known collectively as Hashid Shaabi or Popular Mobilization, last week said they will help the army take back Tal Afar, an ethnic Turkmen city west of Mosul.

Iraqi defense ministry spokesman Brigadier-General Yahya Rasool told Al-Sumariya television channel on Wednesday that the PMF would open a new front in Mosul in the coming days. He gave no details, but Hadi al-Amiri, head of Badr, the most powerful of these militias, was to give a news conference later on Wednesday.

Tal Afar's population was a mix of Sunni and Shi'ite ethnic Turkmens until Shi'ites fled the town two years ago - the ultra-hardline Sunni Islamic State fighters consider them unbelievers.

The participation of the Shi'ite militias is raising concerns of sectarian violence with the majority Sunni population of the region.

Turkish Foreign Minister Mevlut Cavusoglu said on Wednesday Turkey will take measures should the Iranian-backed militias attack Tal Afar.

Turkey and Iraq's Shi'ite-dominated central government are at loggerheads over the presence - unauthorised by Baghdad - of Turkish troops at a camp in northern Iraq.

Ankara fears that Shi'ite militias, which have been accused of abuses against Sunni civilians elsewhere, will be used in the Mosul offensive. Turkey's own presence in Iraq has also helped inflame sectarian passions among Shi'ites.

(Editing by Dominic Evans) ((maher.chmaytelli@thomsonreuters.com; +9647901917030;))