The report said an additional 100,000 people were fleeing to Syria and Jordan every month.
More than 1.6 million Iraqis are now believed to have sought refuge abroad since the US-led invasion in spring 2003.
Baghdad remains the epicentre of the violence wracking Iraq, accounting for nearly 5,000 of all the deaths in September and October, with most of the bodies found bearing signs of torture and gunshot wounds.
3,709 died violently in October.
13,653 killed since July.
120 killed every day.
In its bi-monthly human rights report, the UN said sectarian attacks were the main source of violence.
"Entire communities have been affected to various degrees and, in some areas, neighbourhoods have been split up or inhabitants have been forced to flee to other areas or even to neighbouring countries in search of safety," the report said.
The Iraqi government responded to the report by accusing the United Nations of exaggerating and "misleading the world".
"These statistics are not accurate," Ali al-Shimeri, the health minister, told state television.
"The operations room at the health ministry and the central morgue did not give these statistics to the UN.
"In some areas, neighbourhoods have been split up or inhabitants forced to flee"
UN report on Iraq
Send us your views
"They are eager to go to unreliable sources in the health ministry, through a doctor or a nurse, but this is not accurate.
"They want to mislead the world with these exaggerated figures. There is no figure of 7,000 for the past two months. If you want to talk about real figures, then they are a quarter of this figure," he said.
Meanwhile in Iraq, a local journalist working for the state-run al-Sabah newspaper in Baghdad was killed in a drive-by shooting on Wednesday.
Police said Raad Jaafar Hamadi was driving in the capital's western neighbourhood of Washash when four unidentified men travelling in a black BMW shot him dead.
The identity and motive of the killers were not known.
Elsewhere a US soldier died of a non-battle injury north of Baghdad, the US military said.