I am unable to restore my iPhone because it wants me to download the update but I am unable due to non adequate disk space

Try first to free up iPhone device storage, see this Apple articles below:

If you need more space for an update on your iPhone, iPad, or iPod touch

https://support.apple.com/en-us/HT203097

How to check the storage on your iPhone, iPad and iPod touch

https://support.apple.com/en-gb/HT201656

Clear Other storage on your iPhone or iPad

https://support.apple.com/en-us/HT211686

What's the difference between device storage and iCloud storage?

https://support.apple.com/en-us/HT206504