AMMAN, March 22, 2007 (Reuters) - United Nations agencies working in Iraq warned on Thursday a chronic shortage of safe drinking water risks causing more child deaths and an outbreak of waterborne disease such as cholera during the summer.

Four years after the U.S.-led invasion of Iraq in 2003, millions of Iraqi children still find that safe water is no easier to access, said a statement issued by leading U.N. aid agencies operating in Iraq.

The agencies, whose offices are based in Amman, issued the statement to mark World Water Day.

The United Nations Children's Fund (UNICEF) said shortages of drinking water threatened to push up diarrhoea rates, particularly among children. Diarrhoea is already the second highest cause of child illness and death in Iraq, it said.

"Latest reports suggest we are already seeing an increase in diarrhoea, even before the usual onset of the diarrhoea season in June," said Roger Wright, UNICEF representative in Iraq.

Efforts to repair Iraq's damaged water networks have been hampered by electricity shortages, attacks on technicians, infrastructure and engineering works and underinvestment in the water sector, the agencies said.

Iraq was still relying on U.N. support to provide essential water treatment chemicals with UNICEF alone providing 1,650 tonnes of chlorine last year, the statement said.

The suspension of water tankering services to tens of thousands of people in Baghdad, especially to displaced families and communities hosting them, increased the risk of cholera outbreaks, the agencies warned.

"Under the circumstances, Iraq has done extremely well to keep outbreaks of waterborne diseases, especially cholera, largely at bay so far. But this achievement is at risk unless more reliable sources of safe water reach families as soon as possible," the joint statement said.

No cholera cases were reported last year and the incidence of typhoid also decreased, according to WHO data.

The U.N. bodies said the need for aid was expected to rise in 2007 with the worsening humanitarian plight from raging sectarian violence and insurgent attacks.

They estimated that children and women account for nearly 70 percent of the over 712,000 Iraqis who were internally displaced last year after the bombing of a major Shi'ite shrine in February 2006 triggered a surge in sectarian violence.