The UN said in a statement that "184 front line health services have been suspended because of the paralysing funding shortfall for humanitarian activities in Iraq".
"More than 80 percent of general health programmes supported by humanitarian partners are now shut, directly impacting one million people," it said.
"At a time when the people of Iraq need us the most, we are letting them down," the UN's humanitarian coordinator for Iraq, Lise Grande, said.
The UN said that the lack of funding meant that half a million children would not be immunised, leading to a risk of measles outbreak and the re-emergence of polio.
The funding shortfall had already led to the sharp reduction of food rations for one million people.
Around a third of water, sanitation and hygiene programmes had already been closed and more will suffer the same fate by the end of July, it said.
Among the other consequences of the funding crisis, the UN said its programmes assisting women and girls who have survived sexual violence would also be cut back.
On June 4, the UN launched an appeal for half a billion dollars to tackle the spiralling humanitarian crisis in Iraq, where conflict has displaced more than three million people since the start of 2014.
"To date, only 15 percent of this has been secured," the UN said, despite what it said was the most "pared-to-the bone appeal ever launched in the region".
Grande had warned at the time that 10 million Iraqis were likely to need life-saving assistance by the end of 2015.
"Although some support is coming in, it's devastating, inexplicable really, that we are being forced to shut down programmes in a country where so much is at stake and where the international community is so involved," Grande said in Monday's statement.
The first major wave of displacement came when jihadists took control of parts of Anbar province in early 2014.
The Islamic State group's nationwide offensive in June last year brought Iraq to the brink of collapse.
While Iraqi forces, backed by a US-led coalition and neighbouring Iran, have clawed back some land, several regions remain wracked by violence and few of the displaced are able to return to their homes.
Iraq Daily Journal