Arab foreign ministers are set to meet this week in Saudi Arabia to discuss what the Arab League on Monday called the "critical situation" in Iraq.

The talks on Wednesday and Thursday come as Baghdad battles a lightning offensive by Islamic militants advancing on Baghdad after seizing parts of the north, including Iraq's second-largest city Mosul.

Iraqi security forces on Saturday launched a counter-offensive, recapturing two towns north of the capital.

Arab League chief Nabil Al-Arabi said the meeting in Jeddah will "study developments in the critical situation in Iraq and the steps that need to be taken to deal with it", a statement received by AFP said.

Arabi expressed the Cairo-based pan-Arab group's "extreme concern... over the increase of terrorist operations against Iraqis and the targeting of a number of Iraqi cities".

Anti-government fighters, led by the powerful Islamic State of Iraq and the Levant (ISIL) jihadist group, are said to have killed scores of Iraqi soldiers during their offensive, a "horrifying" massacre that has drawn international condemnation.