Iraq's Foreign Minister Hoshiyar Zebari said on Friday that the Kurdish political bloc has ended all participation in the national government in protest over Prime Minister Nouri al-Maliki's saying that Kurds are hosting terrorists in their capital Arbil.

"We have suspended our government business," said Zebari.

The Kurds said on Thursday they were cancelling their participation in cabinet meetings.

However, Zebari told Reuters that Kurdish ministers were now suspending their day-to-day running of his ministry, the trade ministry, the ministry of migration, the health ministry and the deputy premiership.

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Ties between al-Maliki and the Kurds have long been strained, and the two sides have squabbled over a range of issues for years, chief among them oil rights and land disputes. But they have also worked together, and the Kurds have twice provided critical support to help al-Maliki secure the post of prime minister.

But the Sunni militant offensive led by the Islamic State extremist group that seized control of much of northern and western Iraq last month has seemingly altered the power dynamics. The Kurds have taken advantage of the chaos to push into disputed territory, including the oil-rich area of Kirkuk, and to move closer to a decades-old dream of independence.

Those moves have infuriated al-Maliki, who on Wednesday accused the Kurdish self-rule region of harbouring the Sunni insurgents. The prime minister provided no evidence to support his claims, and the Kurds denied the allegations.

On Thursday, Deputy Prime Minister Roz Nouri Shawez, the highest level Kurdish official in al-Maliki's government, told reporters that "such statements are meant to hide the big security fiasco by blaming others, and we announce our boycott of Cabinet meetings."

The Kurdish Peshmerga forces have been able to keep ISIS at bay while Iraqi forces melted away in the face of the militant group's advance. (Margaret Evans/CBC)

Kurds also hold the Cabinet posts for foreign affairs, trade, health and immigration and displacement.

The move is largely symbolic, since the government has continued operating in the past when the Sunni bloc fully withdrew its ministers from the Cabinet. But it underlines the deepening split between al-Maliki and the Kurds.

The presidency of the Kurdish self-rule region said al-Maliki "has become hysterical and has lost his balance."

"He is doing everything he can to justify his failures and put the blame on others for these failures," the Kurdish region's presidency said in a statement posted on its website late Wednesday. It accused al-Maliki of destroying the country, and demanded that he step down.

Pursues 3rd term

Al-Maliki's rivals and even some former allies accuse the prime minister of helping fuel the current crisis by failing to promote reconciliation with the country's minority Sunnis, who complain of being treated as second-class citizens.

Al-Maliki, whose State of Law bloc won the most seats in April elections, has refused to heed calls to step aside, and instead has vowed to pursue a third consecutive term. That has led to political deadlock as lawmakers attempt to form a new government that can hold the country together as it confronts the militant threat.

Later Thursday, Iraq's civil aviation authority in Baghdad suspended all cargo flights to the Kurdish region until further notice. The head of the aviation authority, Nassir Bandar, said the decision was taken "due to the security situation and (events) in Mosul where it is not possible for us to handle shipments."

He said passenger flights to the cities of Sulaimaniyah and Irbil in the Kurdish region will not be affected.

In the militant-held city of Fallujah, government airstrikes and shelling killed at least 10 people and wounded another 30, said Ahmed Shami, a doctor at a hospital in the city. He said a rocket attack late Thursday killed another three people, although it was unclear who fired the rockets.

No health risk

Shami said the hospital also received the bodies of 16 militants early Thursday. It was unclear how or when they were killed.

In Vienna, the UN's nuclear agency said atomic material has been taken from a university in Iraq in a region controlled by Islamic militants but that it does not present a health, safety or proliferation risk.

The International Atomic Energy Agency described the material as "low-grade" and said its removal from Mosul University does not translate into a "significant" danger of any kind.

The agency said it was notified by Iraqi officials of the seizure of the unspecified material and is seeking further details. The IAEA statement gave no further information about the type or amount of material missing, or who the suspected thieves were.