A Saudi-led coalition backing Yemen's exiled government has launched an assault on Yemen's port city of Hodeida, a crucial battle in the three-year conflict that aid agencies warned could push the Arab world's poorest country into further chaos.

Iranian-aligned Shiite rebels known as Houthis and their allies have for years held the Red Sea port, crucial to food supplies in a nation on the brink of famine after years of war.

The battle for Hodeida, if the Houthis do not withdraw, could also mark the first major street-to-street urban fighting for the Saudi-led coalition, which can be deadly for combatants and civilians alike.

Before dawn, convoys of vehicles appeared to be heading towards the rebel-held city, according to videos posted on social media. The sound of heavy, sustained gunfire could be heard in the background.

Saudi-owned news channels and later state media announced the battle had begun, citing military sources. 

as many as 250,000 people may lose everything - even their lives" in the assault

Yemen's exiled government "has exhausted all peaceful and political means to remove the Houthi militia from the port of Hodeida", it said in a statement. "Liberation of the port of Hodeida is a milestone in our struggle to regain Yemen from the militias."

The Houthi-run Al Masirah satellite news channel acknowledged the offensive, claiming rebel forces hit a Saudi coalition ship near Hodeida with two land-to-sea missiles.

"The targeted ship was carrying troops prepared for a landing on the coast of Hodeida," the channel said.

Forces loyal to Yemen's exiled government and irregular fighters led by Emirati troops had neared Hodeida in recent days. The port is 90 miles south west of Sanaa, Yemen's capital, held by the Houthis since they swept into the city in September 2014.

The Saudi-led coalition entered the war in March 2015 and has received logistical support from the US.

Emirati foreign minister Anwar Gargash earlier told French newspaper Le Figaro that the deadline for a withdrawal from Hodeida by the Houthis expired early on Wednesday.

The United Nations and other aid groups had already pulled their international staff from Hodeida ahead of the assault.

More than 10,000 people have been killed in Yemen's civil war, which has displaced two million more and helped spawn a cholera epidemic.

The Saudi-led coalition has been criticised for its air strikes killing civilians, while the UN and Western nations say Iran has supplied the Houthis with weapons from assault rifles up to the ballistic missiles they have fired deep into Saudi Arabia, including at the capital Riyadh.

Before the war, over 70% of Yemen's food and fuel imports came through Hodeida, accounting for over 40% of the nation's customs income. The port remains crucial for incoming aid, food and medicine for a nation driven to the brink of famine by the conflict and a Saudi-led blockade.

A Saudi-led air strike in 2015 destroyed cranes at Hodeida. The UN in January shipped in mobile cranes to help unload ships there.

The UN says 600,000 people live in and around Hodeida, and "as many as 250,000 people may lose everything - even their lives" in the assault.

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