Italy's Trevi Group has won a bid to make urgent repairs to Iraq's Mosul hydro-electric dam, close to territory held by Islamic State (IS) militants, and expects to sign a contract in coming weeks, the Italian foreign minister said on Tuesday.

The 3.6-km-long dam has suffered from structural flaws since its construction in the 1980s, and any collapse would unleash a wall of water down the heavily populated Tigris River valley.

Italian forces will be deployed to protect the work site for the dam, whose deterioration has forced the US military to draft a contingency plan for its potential failure.

"Trevi has won the bid" for the work on the dam, Foreign Minister Paolo Gentiloni told reporters at a news conference held jointly with US Secretary of State John Kerry in Rome.

Gentiloni said the contract would be signed within days. Trevi Group CEO Stefano Trevisani later said in a statement that it was "difficult to forecast the timing, but it should be a matter of weeks".

The Iraqi cabinet met on Tuesday and decided to award the maintenance contract to Trevi, the company said in a statement. The job is expected to take 18 months.

Italy has so far declined to join bombing raids against Islamic State in Syria, but last month Prime Minister Matteo Renzi said he would deploy 450 troops to protect workers at the dam, which is just up the road from IS-held Mosul.

"We have been in contact with Baghdad for many weeks, and the Italian forces will be deployed to defend the work site in agreement with the coalition," Gentiloni said after a meeting with officials from more than 20 countries who have agreed to fight Islamic State together.

Islamic State seized the Mosul dam in August 2014, raising fears they might blow it up and send a huge wave onto Mosul and Baghdad that could kill hundreds of thousands.

Kurdish Peshmerga fighters recaptured the dam two weeks later with the help of U.S.-led coalition air strikes and Iraqi government forces.

Islamic State has created a self-proclaimed "caliphate across swathes of Syria and Iraq, and has spread into parts of some other countries, notably Libya.-Reuters