Jihadists were pushing towards Baghdad yesterday after capturing a town just hours to the north, as the US mulled air strikes in a bid to bolster the country's collapsing security forces.
With the militants closing in on the capital, forces from Iraq's autonomous Kurdish region took control of Kirkuk, an ethnically divided northern city they have sought to rule for decades.
Iraqi Foreign Minister Hoshyar Zebari acknowledged security forces, which the US invested billions in training and equipping before withdrawing its own troops in 2011, had melted away.
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 the al-Qaeda leadership, showed the pointlessness of the 2003 US-led invasion.
US President Barack Obama said he was "looking at all the options" in helping the Iraqi government.
"I don't rule anything out," he said when asked whether the US was considering drone strikes or any other action to stop the insurgency.
Video: Iraqi soldiers battle militants outside Kirkuk
Washington found rare common cause with its long-time foe Tehran, with Iran voicing dismay at the Sunni extremists' advance and pledging to boost aid to Iraq's beleaguered Shiite prime minister. The UN last night started talks on the crisis.
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 second city Mosul late on Monday, advanced into ethnically divided Diyala province. The insurgents captured the town of Dhuluiyah, 90km from Baghdad.
ISIL spokesman Abu Mohammed al-Adnani vowed the jihadists would not stop there, but would press on to the capital and the Shiite shrine city of Karbala.
The Shiite-led government has been left floundering by the speed of the jihadist assault, which has forced hundreds of Iraqis to flee their homes.
Prime Minister Nouri al-Maliki said he would seek parliament's authorisation to declare a state of emergency, but MPs failed to muster a quorum for the vote despite the session being announced two days before.
The US was considering several options for offering military assistance to Baghdad, including drone strikes, a US official said on condition of anonymity. But there is no current plan to send US troops back into Iraq.