By Phil Stewart and Idrees Ali

WASHINGTON (Reuters) - Iraq is on track to meet its objective of retaking the city of Mosul from Islamic State later this year, should Prime Minister Haider al-Abadi choose to go forward as planned, the head of the U.S. military's Central Command said on Tuesday.

"It's the prime minister's objective to have that done by the end of the year," General Joseph Votel, who oversees U.S. forces in the Middle East, told a news conference. "My assessment is that we can meet the ... prime minister's objectives, if that's what he chooses to do."

Two years since Islamic State seized wide swathes of northern and western Iraq, Votel said momentum had firmly shifted against the militant group as it loses territory in its self-proclaimed "caliphate".

Mosul has been the largest urban center under the militants' control, with a pre-war population of nearly 2 million. It was from Mosul's Grand Mosque in 2014 that Islamic State leader Abu Bakr al-Baghdadi declared a "caliphate" spanning regions of Iraq and Syria.

Votel said the battle for Mosul could present a mixed picture for war planners, with Islamic State retreating in some areas only to reinforce in others.

"ISIL is having to make hard decisions, because they're being pressured in a variety of ways," Votel said.

He pointed to the two-and-a-half month battle by U.S.-backed forces in Syria to take back the town of Manbij from Islamic State as an example of how fighting could become protracted.

"We should expect that in some places, perhaps in some parts of Mosul, they will cede that area to us, to the coalition, to the Iraqis. And then in other areas, they will fight harder to hold onto that," Votel said.

Although Iraqi and U.S. officials have not announced a timetable for moving on the city, a senior Baghdad-based diplomat said last month Abadi wanted to bring forward the start of the Mosul campaign to October.

The U.N. estimates that under a worst-case scenario, more than 1 million people could be displaced from Mosul and another 830,000 from a populated corridor south of the city, adding to the burden of caring for 3.5 million Iraqis displaced by Islamic State's 2014 onslaught and U.S.-backed Iraqi counter-offensives.

(Reporting by Phil Stewart, Idrees Ali and Ruthy Munoz; Editing by James Dalgleish)