* U.S. commander defends U.S. behavior in war
* Fighting focused around Mosul's Old City
* Thousands trapped in Islamic State-held areas
* U.N. says forces must spare civilians (Adds more soldiers headed to Iraq, paragraph 11)
By Isabel Coles, Phil Stewart and Idrees Ali
MOSUL, Iraq/WASHINGTON, March 28 (Reuters) - The senior U.S. commander in Iraq acknowledged on Tuesday that the U.S.-led coalition probably had a role in an explosion in Mosul believed to have killed scores of civilians but said Islamic State could also be to blame.
As investigators probe the blast, Lieutenant General Stephen Townsend strongly defended U.S. behavior in the war and pushed back against accusations the United States had loosened safeguards meant to protect civilians as it ramps up the battle against Islamic State.
Still, he said increases in casualties were to be expected as the war against the insurgents entered its deadliest phase in the cramped, narrow streets of Mosul's Old City.
"It is the toughest and most brutal close-quarters combat that I have experienced in my 34 years of service," Townsend told Pentagon reporters, speaking from Iraq.
"What has not changed is our care, our caution ... our tolerance from civilian casualties - none of that has changed."
Rights group Amnesty International has said the high civilian toll in Mosul suggested U.S.-led coalition forces had failed to take adequate precautions to prevent civilian deaths.
Investigators combed through the rubble left by a March 17 explosion in al-Jadida district in west Mosul, where Iraqi forces backed by U.S.-led coalition air strikes are fighting to clear Islamic State militants from Iraq's second city.
One line of investigation is whether Islamic State rigged explosives that ultimately caused the blast that destroyed buildings. One estimate put the death toll at more than 200 people.
"My initial assessment is that we probably had a role in these casualties," Townsend told a Pentagon news briefing, speaking by teleconference.
"Now, here's what I don't know. What I don't know is were they (the civilians) gathered there by the enemy? We still have some assessments to do. ... I would say this, that it sure looks like they were."
The United States has about 5,200 troops in Iraq, the Pentagon says. Officials say two more companies of U.S. soldiers, just under 300 troops, are headed to Iraq on a temporary deployment.
FAMILIES BURIED UNDER RUBBLE
Witnesses on Sunday described horrific scenes of body parts strewn over rubble, residents trying desperately to pull out survivors and other people buried out of reach.
The Iraqi military's figure of 61 bodies was lower than that given by local officials - a municipal official said on Saturday that 240 bodies had been pulled from the rubble. A local lawmaker and two witnesses say a coalition air strike may have targeted a truck bomb, triggering a blast that collapsed buildings.
If confirmed, the toll would be one of the worst since the 2003 U.S.-led invasion, raising questions about civilian safety as Iraq's Shi'ite-led government tries to avoid alienating Mosul's mostly Sunni population.
Iraq's military command has blamed militants for rigging a building with explosives to cause civilian casualties, but some witnesses say it was collapsed by an air strike, burying many families under the rubble.
"My initial impression is the enemy had a hand in this. And there's also a fair chance that our strike had some role in it," Townsend said. "I think it's probably going to play out to be some sort of combination. But you know what, I can't really say for sure and we just have to let the investigation play out."
Townsend noted that the type of munitions the U.S.-led coalition had used should not have collapsed a building.
U.S. Army Chief of Staff General Mark Milley after meeting Iraqi Prime Minister Haider al-Abadi and Iraq's defense minister late on Monday, said there had been air strikes in the vicinity that day and on previous days but it was not clear they had caused the casualties.
He raised the possibility that Islamic State blew up the building to cast blame on the coalition and "cause a delay in the offensive on Mosul".
A source close to Abadi's office said the U.S. military delegation also called for more coordination among the Iraqi security force units on the ground and for consideration that thousands of civilians are stuck in their homes.
The United Nations rights chief said on Tuesday at least 307 civilians had been killed and 273 wounded in western Mosul since Feb. 17, saying Islamic State was herding residents into booby-trapped buildings as human shields and firing on those who tried to flee.
"This is an enemy that ruthlessly exploits civilians to serve its own ends," U.N. High Commissioner for Human Rights Zeid Ra'ad al-Hussein said. "It is vital that the Iraqi security forces and their coalition partners avoid this trap."
Iraqi forces have retaken eastern Mosul and are pushing through the west, but have faced tough resistance in the densely populated districts around the Old City, where narrow streets and traditional homes force close-quarters fighting.
Iraqi forces fighting around the Old City tried to storm the al-Midan and Suq al Sha'areen districts, where Islamic State ran its religious police who carried out brutal punishments, such as crucifixion and public floggings, federal police commander Lieutenant General Raed Shakir Jawdat told state al-Sabah newspaper.
Helicopters were strafing Islamic State targets around Al Nuri mosque, where Islamic State's leader declared his caliphate nearly three years ago after militants took control of swaths of Iraq and Syria.
Thousands of civilians are fleeing the fighting, shelling and air strikes, but as many as half a million people may be trapped inside the city.
(Additional reporting by Ahmed Rasheed in Baghdad; Writing by Patrick Markey and Phil Stewart; Editing by Janet Lawrence and Peter Cooney)