An Iraqi boy bathes at a sulfur pond at Hammam al-Alil city south of Mosul, Iraq on April 3, 2017. [Photo/Agencies]

Hammam al-Alil, a town south of Mosul once famous throughout Iraq for its healing hot waters, is back in business after a US-backed offensive retook the area from Islamic State militants and authorities reopened its spa.

This oasis of leisure now coexists, however, with camps housing more than 30,000 of the people displaced in the region by the campaign to dislodge Islamic State from Mosul, its the last major city stronghold in Iraq.

"I come here three times a week," said 47-year old Ali Qader, a retired soldier, after showering with water from a natural spring. "It's refreshing and good for your skin."

Residents have been flocking back since Islamic State was expelled from the town in early November, ending the days when bathers had to wear a tunic covering them from knee to navel as part of the Sunni Muslim movement's strict modesty code.

"If you had only swimwear, Daesh (Islamic State) would whip you," said Wael Abdullah, 12, before diving into a pool.

"The hisbah came checking that everyone had the right dress," he said, referring to the religious police that monitored everything from men's beards to women's veils.

Across the street is an indoor pool where locals and soldiers taking a day off from the front get a soapy massage.

The spa used to be magnet for wellness tourists and rheumatism patients but had passed its heyday even before the Islamist militants arrived in 2014.

"We used to have visitors from Baghdad, the south and even the Gulf, Kuwait, Saudi Arabia," said Latif Mohammed, who was hired to help run the spa for 10,000 Iraqi dinars ($8.58) a day. "It was built in the '80s but needs refurbishing."

The elegant hotels at the spa are now shuttered or bombed out because Islamic State fighters used to live there. A machine gun nest at the entrance shatters any sense of normality.

On Monday, the spa opened only at noon due to rumours of an Islamic State attack, said a federal police officer.