A mass exodus is expected as Iraqi forces advance on the self-proclaimed IS's last major stronghold in Iraq.
Australia for has launched a fund raising effort to help the UN Refugee Agency establish additional camps for the displaced.
"There is a huge gap unfortunately between what we have and what is needed currently in funding," Australia for UNHCR national director Naomi Steer said.
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The UNHCR estimates it has only got about 38 per cent of the funding required to provide provide support to those who flee the fighting in Mosul.
Australia for UNHCR is hoping to raise about $4 million to help the aid agency supply urgently needed core equipment, such as tents, blankets, hygiene kits and cooking items.
"Already UNHCR is on the ground. It has a number of pre-positioned supplies, so the people that are able to get to safety are currently getting relief. But of course we need much more," Ms Steer said.
Risk of human rights abuses
The human rights group says Iraqi authorities must ensure civilians fleeing Mosul are not subject to abuse or revenge attacks by paramilitary and government forces.
In a report Punished for Daesh’s crimes: Displaced Iraqis abused by militias and Government Forces the group says Sunni Arabs escaping IS controlled territory have been tortured, arbitrarily detained, disappeared or killed by predominantly Shi'a militias and government forces in the past.
"These kinds of abuses have been happening for years in a climate of impunity without anyone being punished," Amnesty International Iraq researcher, Diana Eltahawy, said.
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"The Iraqi authorities really need to translate their calls for the protection of civilians into concrete actions on the ground."
Amnesty International says the international community must not turn a blind eye to violations.
"States that are providing military support to the Iraqi government must ensure that any weapons that they sell or transfer to the Iraqi government are not used to facilitate or commit human rights abuses," Ms Eltahawy said.
