By Alaa al-Marjani and Saif Hameed

BAGHDAD (Reuters) - The world's largest cemetery, in Iraq's Shi'ite holy city of Najaf, is expanding at double its usual rate as the nation's death rate increased with the war on Islamic State.

The Wadi al-Salam cemetery, Arabic for "Peace Valley," has a special place in the hearts of Shi'ite Muslims as it surrounds the Mausoleum of their first imam, Ali Bin Abi Talib, a cousin and son-in-law of Prophet Mohammad.

The pace of daily burials rose to 150-200 after Islamic State, the ultra-hardline Sunni group overran a third of the country in 2014, said Jihad Abu Saybi, a historian of the cemetery. The rate was 80-120 a day previously, he said.

Shi'ite paramilitary often visit Ali's golden-domed shrine before heading to the frontlines to battle Islamic State, and request to be laid to rest in Wadi al-Salam should they be killed, as a reward for their sacrifice.

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As land becomes scarce, the cost of a standard 25 square meter family burial lot has risen to about 5 million Iraqi dinars ($4100) almost double the amount paid for the same lots before violence escalated as IS exerted control over large swathes of north and western Iraq in 2014.

Millions of graves of different shapes lie in the roughly 10 square km (4 square miles) cemetery that attracts burials from Shiites all over the world. By nationality, Iraq's Iranian neighbors are thought to come second in number people interred near Ali's golden-domed shrine.

Often built with baked bricks and plaster, decorated with Koranic calligraphy, some graves are above ground tombs, reflecting the wealth of those within.

(Editing by Jeremy Gaunt.)