Talib al-Ajami stands near his makeshift house in a garbage and sewage-filled slum in north Baghdad holding a torn, creased letter from insurgents who drove him from his home in 2006.

"In the name of God, the Beneficent, the Merciful," the letter begins, but the only mercy in what follows is that Talib received a "final warning" instead of being killed outright.

"We know about you and your mean, sectarian activities, and it is time for every soul that holds destruction and hatred for this country to die," it says.

"You should know that you are a target for us wherever you go. This published statement is for the traitors who live in Khamis al-Tajah," a small village near Abu Ghraib, west of Baghdad.

The letter, which is signed the "Advisory Council of the Mujahedeen", was the second Talib had received in 2006.

One of his brothers was murdered without warning, and Talib decided to leave. He now lives in a shanty town called Mukhayamat.

Iraq's brutal sectarian war has died down from its peak in 2006 and 2007, but the UN says some 1.3 million Iraqis remain internally displaced persons (IDPs) -- Iraqis living in their country, but driven from their homes.

According to UN envoy Martin Kobler, some 500,000 of them live in "sub-standard" conditions.

Claire Bourgeois, the UN Refugee Agency (UNHCR) representative for Iraq, said that fear and lack of a place to return to are among the main issues keeping IDPs from going home.

Mukhayamat, one of six "settlements" in the Chikouk area of Kadhimiyah neighbourhood in north Baghdad, is a miserable slum of makeshift one-storey houses with woven reeds or sheets of metal for roofs, often topped with plastic to shield against the rain.

Spiderwebs of electric wiring strung from wooden poles provide electricity to power a few light bulbs, a fan or tiny television in the houses.

The garbage-strewn streets are dirty and rutted, and some have small canals down the middle that carry sewage into expansive pools of fetid water.

It is here that Talib lives with one of his two wives and two of his nine children, in two small, sparse rooms in a house of rough concrete blocks with a makeshift metal roof. His other wife and children live elsewhere.

The house has a small walled dirt yard and a garden, but is flanked by a garbage dump on one side and a pond of murky, junk-filled water on the other.

"The area here is safe but the situation is miserable," said Talib, who is 40 years old and works as a day labourer when he can find jobs. "I am afraid of returning back home."

Talib's lot in life was once different, when he and two brothers each owned homes in Khamis al-Tajah.

But that changed in 2006, after the bombing of the Shiite Al-Askari shrine in Samarra unleashed a wave of sectarian violence across Iraq.

'My life is like hell'

Talib said he received one threatening letter, but ignored it. The second, marked "final warning," followed two weeks later.

One of his brothers was kidnapped and murdered in 2006 without receiving a warning, Talib said, and he decided to leave.

Talib was later told his house had been blown up.

"We lost everything we owned; we left the area without getting anything from home," Talib said. "We demand the government to compensate us for our lost houses and properties."

The Mukhayamat settlement, which is home to some 3,000 people, is one of the worst in the Chikouk area,

where a total of about 50,000 IDPs reside, UNHCR senior field assistant Mazin al-Nkshbandi said.

"There is no sewage network, there is no water or water network," he said. "It's not designed for living."

Other settlements in Chikouk face similar problems, he said.

UNHCR provides assistance to IDPs including items such as water tanks and filters, doors and windows, and removing garbage and sewage, Nkshbandi said.

But local authorities do not provide services such as garbage pickup because the IDP settlements are illegal, so the waste builds back up, he said.

While the conditions in Chikouk are awful, leaving has its own risks -- Nkshbandi said that some people who left the area for their homes were killed.

Sabria Hamad, 49, also resides in Mukhayamat.

"Four times we found threats under our door," but "as we cannot read or write, we shredded them," said Sabria, who used to live in Haswa in the Abu Ghraib area.

Gunmen later came to deliver the message that "you Shiites cannot stay here anymore," Sabria said, so she and her family left.

"They did not give us the chance to take anything from our house," she said.

But that did not spare her family -- one of her sons was electrocuted to death in a butcher shop in Taji, north of Baghdad, in what Sabria suspects was not an accident.

Another son was shot dead in the town of Latifiyah south of Baghdad with his uncle, and a daughter was killed in clashes involving American forces in Diyala province.

Sabria now lives in a three-room shanty made of concrete blocks with her husband, a handicapped son and 14 grandchildren.

The rooms have bare walls and carpets on the floor. When she, her husband and some of the grandchildren ate lunch, they gathered around a large metal plate of rice, sitting on the floor.

A partially-collapsed reed fence frames the house's small, dusty, junk-strewn yard. The house is located near the other end of the garbage dump that adjoins Talib's yard.

"My life is like hell; I swear by God, I do not have 1,000 dinars," or less than $1, Sabria said.

"The government did not help us and did not find a solution for us," she continued.

She and her family had lived in Haswa for years, but cannot go back: "Some people went back and they killed them. We do not have place to return and we are afraid."