Iraqi forces say Daesh now controls only a few districts in the western half of Mosul, including the Old City.
Iraqi forces have recaptured nearly 90 percent of west Mosul from Daesh after retaking the city's eastern side earlier this year, a military spokesman said on Tuesday.
Daesh still controls "10.5 percent of the right bank," Brigadier General Yahya Rasool, spokesman for the Joint Operations Command, said at a news conference in Baghdad, referring to west Mosul.
Iraqi forces launched the massive operation to retake Mosul from Daesh nearly seven months ago, fighting their way to the city, retaking its eastern side and then attacking the west.
A spokesman for the US-led coalition backing Iraqi forces said the militants were completely surrounded in the city and their resources were being destroyed.
"The enemy is on the brink of total defeat in Mosul," US Air Force Colonel John Dorrian said at the news conference in Baghdad.
Daesh now controls just a handful of neighbourhoods around the Old City, one of the country's heritage jewels.
Civilian population complicates offensive
The area's narrow streets and closely spaced buildings will make it difficult for federal forces to take on the militants, requiring them to fight on foot instead of from vehicles as they have previously done.
Some 250,000 civilians are estimated to still be trapped inside west Mosul.
The presence of a large civilian population, which either chose not to leave or was prevented from doing so by Daesh, also complicates any final assault to seal victory in Mosul.
Daesh overran large areas north and west of Baghdad in 2014, but Iraqi forces backed by US-led air strikes have since retaken much of the territory they lost to the militants.