Iraq's Prime Minister Nouri al-Maliki has ordered his air force to back Kurdish forces against Islamic State fighters for the first time after the armed group made another dramatic push through the north, state television reported on Monday.

The Islamic State (IS) inflicted a humiliating defeat on Kurdish forces on Sunday with a rapid advance through three towns to reach the Mosul Dam, acquiring a fifth oil field to fund its operations along the way.

"The general commander of the armed forces has ordered the air force command to provide backup for the Kurdish peshmerga forces against the terrorist gangs of the Islamic State," state television quoted Maliki's military spokesman as saying.

State television and witnesses said IS fighters had seized Iraq's biggest dam. Kurdish peshmerga officials said they had pushed fighters from the dam area and were in control of it.

he general commander of the armed forces has ordered the air force command to provide backup for the Kurdish peshmerga forces against the terrorist gangs of the Islamic State Qassim Atta, Iraqi military spokesman

Kurdish commanders whose units came under attack from IS fighters told Reuters they faced overwhelming firepower, were taken by surprise and that IS fighters had in many cases started shooting from villages where they had struck up alliances with residents.

The areas that the Kurdish forces lost were not part of their semi-autonomous region, but had been seized in the north after the fall of Saddam Hussein.

The Kurdish region is pressing the Obama administration for sophisticated weapons its says Kurdish fighters need to push back the IS fighters threatening their region.

The requested supplies include tanks, sniper equipment, armoured personnel carriers, artillery and ammunition.

The move is likely to further anger Maliki, who may see it as an attempt to circumvent the Baghdad government in a long-standing drive for independence.

The senior Kurdish official said Kurdish forces had been overstretched because they had to watch over a vast territory.

"The Islamic State has also been intimidating people by carrying out beheadings," he said, asking not to be identified. "It is a very dangerous situation for the region. Something needs to be done soon," the senior Kurdish official said.

Split with government

Maliki has been at odds with the Kurds over budgets, oil and land, and tensions deepened after IS seized control of large swathes of land in the north and west of OPEC member Iraq.

In July, the Kurdish political bloc ended all participation in Iraq's national government in protest over Maliki's accusation that Kurds were allowing terrorists to stay in Erbil, the capital of their semi-autonomous region known as Kurdistan.

Opponents accuse Maliki of being an authoritarian ruler with a sectarian agenda whose alienation of Sunnis fuelled the insurgency.

Currently ruling in a caretaker capacity after an inconclusive election in April, he has defied calls by Sunnis, Kurds and even some fellow Shia to step aside to make room for a less polarising figure.