Jihadists pushed towards Baghdad Friday as President Barack Obama said he was exploring all options to save Iraq's security forces from collapse and US companies evacuated hundreds from a major air base.
With militants closing in on the capital, forces from Iraq's autonomous Kurdish region took control of a swathe of territory they have sought to rule for decades against the objections of successive governments in Baghdad.
Foreign Minister Hosyhar Zebari acknowledged that the security forces Washington invested billions of dollars in training and equipping before withdrawing its own troops in 2011 had simply melted away.
Obama said Iraq was going to need "more help from the United States and from the international community."
"Our national security team is looking at all the options... I don't rule out anything," he said.
Russia said the lightning gains by the Islamic State of Iraq and the Levant (ISIL), a movement so radical it has been disavowed even by Al-Qaeda's leadership, showed the pointlessness of the 2003 US-led invasion, carried out in the aftermath of the 9/11 attacks in the United States.
Washington found rare common cause with its longtime foe Tehran, with both voicing dismay at the Sunni extremists' advance and pledging to boost aid to Iraq's beleaguered Shiite prime minister.
The militants, who have swept up a huge swathe of predominantly Sunni Arab territory in northern and north-central Iraq since launching their offensive in the second city Mosul late Monday, advanced into ethnically divided Diyala province.
On Friday, they were fighting pro-government forces near Muqdadiyah, just 80 kilometres (50 miles) from the Baghdad city limits.
Diyala's mixed Arab, Kurdish, Sunni and Shiite population has made the province a byword for violence ever since the 2003 overthrow of Sunni Arab dictator Saddam Hussein.
Kurdish security forces moved into the strategic Saadiyah and Jalawla districts of the province overnight after the army withdrew, Deputy Governor Furat al-Tamimi said.
Kurdish forces already took control of the ethnically divided northern oil city of Kirkuk on Thursday when central government troops pulled out.
It has been the fulfilment of a decades-old Kurdish ambition, opposed by successive governments in Baghdad, to expand their autonomous region in the north to incorporate a swathe of historically Kurdish-majority territory across northern and north-central Iraq.
Prime Minister Nuri al-Maliki's government has been left floundering by the speed of the jihadist assault.
The swift collapse of Baghdad's control comes on top of the loss of Fallujah, west of Baghdad, earlier this year. It has been a blow for Western governments that have paid a steep price both in lives and money in Iraq.
The Iraqi foreign minister acknowledged the collapse of the security forces in Mosul and other cities, with many personnel melting away after discarding their uniforms.
"It is a setback definitely for the Iraqi security forces, who collapsed in the largest city and abandoned their weapons and equipment," he said.
Washington is considering several options for offering military assistance to Baghdad, including drone strikes, a US official told AFP on condition of anonymity.
Resorting to the unmanned aircraft -- used in Afghanistan, Pakistan and Yemen in a highly controversial programme -- would mark a dramatic shift in the US engagement in Iraq, after the last American troops pulled out in late 2011.
But there is no current plan to send ground troops back into Iraq, where around 4,500 American soldiers died during the conflict.
US companies were evacuating "a few hundred" American contractors working with the Iraqi government from Balad air base, 70 kilometres (43 miles) north of the capital, a US defence official said.
The contractors "are being temporarily relocated by their companies due to security concerns in the area," State Department spokeswoman Jen Psaki said.
Russian Foreign Minister Sergei Lavrov said the spectacular collapse of the Western-trained Iraqi army illustrated "the total failure of the adventure involving the United States and Britain."
And Obama's Republican opponents in Congress were swift to accuse the president of abandoning Iraq by pulling out US troops in 2011.
Senator Lindsey Graham warned a jihadist takeover in both Iraq and neighbouring Syria would create a "hell on earth" and called for the urgent deployment of US air power to "change the battlefield equation."
Turkey said it was holding talks to secure the release of dozens of its citizens kidnapped by Islamist militants in northern Iraq amid international calls for their release.
The UN Security Council demanded urgent dialogue and condemned "terrorist" activities, but stopped short of considering action against the militants.
As many as half a million people have fled the jihadist offensive and the World Food Programme said it had started providing assistance to 42,000 of the most vulnerable.