* Residents hear loud explosions constantly
* Drivers double fares for those seeking to flee
* Water supply hit by trench digging, relief workers say
* Suffering is heart-breaking, says UN official (Adds updates throughout)
By Dahlia Nehme
DUBAI, June 22 (Reuters) - Residents unable to flee Hodeidah face constant bombardment, lack of clean water and power cuts as an Arab coalition battles to capture Yemen's main port from Iran-aligned Houthis in the biggest battle of a three-year war.
"We hear loud explosions all the time," Assem Mohammed, a 30-year-old pharmacist, said by telephone. "We haven't had water for three days."
Mohammed, with his wife and six-month-old daughter, are among a dwindling number of residents who have remained in Hawak district, a neighbourhood sandwiched between the airport, captured this week by the coalition, and the sea port, the latest target of the military offensive.
Drivers transporting fleeing residents out of Hodeidah have more than doubled their fares since the battle began, while the hospital where Mohammed works has threatened employees with dismissal if they are absent for long periods.
"Electricity has also been cut in most of the city since three days, and in some neighbourhoods for a week," he said. He blamed the water shortage on damage to pipes that relief workers say has been caused by the Houthis digging trenches. Houthi officials could not immediately be reached for comment.
The alliance of Arab states led by Saudi Arabia and the United Arab Emirates launched its assault on Hodeidah last week in an effort to cut the Houthi fighters who control the capital and most populated areas off from the outside world.
The United Nations fears that the campaign could cause a catastrophe in the country already undergoing the world's most urgent humanitarian crisis. The port is the main lifeline for 22 million people who depend on aid, including 8.4 millions on the verge of starvation.
"We're seeing high levels of malnutrition on the ground," Lise Grande, the U.N. humanitarian coordinator for Yemen told Reuters on Friday.
"Of the main issues we are concerned about, none is more significant right now than the possibility of a cholera outbreak," she added. "We could see hundreds of thousands of people affected."
Hodeidah itself is home to 600,000 people more directly in the line of fire.
Since 2015, Hodeidah residents have used privately-owned generators to produce electricity. But this month's offensive has left them struggling to obtain the necessary diesel oil.
Temperatures during summer in Yemen soar to above 40 degrees Celsius (104 F) in the shade, which along with lack of clean water could help spread disease.
The Arab states have pledged a swift operation to capture the Red Sea port without entering the city centre, to minimise civilian casualties and maintain the flow of essential goods.
Dozens of displaced families have been relocated to schools in the city, Mohammed Kassem, Hodeidah system manager for the International Committee of the Red Cross, told Reuters as relief workers distributed food bags at one facility.
"We ran away only with the clothes we were wearing," said one woman while waiting to receive her share.
The U.N. humanitarian coordinator estimated the number of displaced from Hodeidah at 50,000 to 60,000. The World Food Program (WFP) said that the upsurge in fighting could result in up to 1.1 million people being either displaced or trapped within Hodeidah city and in need of emergency food assistance.
Two vessels carrying a combined 50,000 tons of wheat offloaded their shipment at Hodeidah port this week. A third carrying 25,000 tons of wheat is currently in a coalition holding area to berth in the port, WFP added in a statement.
Grande warned against cholera spreading "with lightning speed" if the water system breaks down and nothing is done to immediately address the situation.
U.N. officials estimate that in a worst-case scenario the fighting could cost up to 250,000 lives, especially if a cholera epidemic occurs in the widely impoverished region.
The Arab coalition intervened in the war in 2015 to roll back Houthi control of Yemen's main population centres and reinstate a government driven into exile. Coalition forces retook much of the south before the war, widely seen as a proxy conflict between Saudi Arabia and Iran, bogged down.
Some Hodeidah families have fled the fighting for safety in the Houthi-held capital Sanaa, while others have headed to Raymah and Wusab, also in Houthi-ruled areas inland.
"They told us there's an organization where we can register as refugees over here, but God knows," said Marwan al-Barah, displaced from Hodeidah, queuing with other men at a school in Sanaa to register families for aid. Women sat on the floor in classrooms as barefoot children and toddlers played nearby. (Reporting by Dahlia Nehme, Naweid Jabarkhyl Editing by Sami Aboudi, William Maclean and Peter Graff)
Our Standards: The Thomson Reuters Trust Principles.