Britain is stepping up its military involvement in the fight against jihadi forces from the Islamic State in Iraq after the defence secretary Michael Fallon confirmed that British warplanes are flying deeper into Iraq in a mission that could last "months".

As David Cameron declared that Britain should be prepared to deploy its "military prowess" to help defeat the jihadis, Fallon said that Britain's involvement in Iraq is fast expanding beyond the initial humanitarian mission to relieve Yazidi refugees besieged on Mount Sinjar.

"This is not simply a humanitarian mission," the defence secretary said as it was confirmed that RAF Tornado jets, which were deployed to the region last week to identify the location of Yazidi refugees, are now monitoring Islamic State (Isis) positions deep into Iraq.

The UK move came as the US announced its most concerted bombing campaign yet over northern Iraq to drive Isis forces back, helping Kurdish forces to reclaim Mosul dam.

American warplanes and drones carried out more than 20 strikes at the weekend near the crucial dam that Isis forces took earlier this month. More than a dozen Isis vehicles were destroyed, the Pentagon said. The bombing is designed to help Kurdish forces regain the initiative in fighting for territory in northern Iraq that Isis has seized over the past three months.

"Mosul Dam was liberated completely," Ali Awni, an official from Iraq's main Kurdish party, told Agence France-Presse, a statement also confirmed by another party official and a Kurdish security forces officer.

Britain was encouraged by the progress over the weekend though Downing Street believes that the US, the Kurds and forces of the Iraqi state face a lengthy battle to defeat the Isis jihadis.

Fallon's declaration that British involvement was expanding beyond a humanitarian mission contrasted with the cautious language of Downing Street last week when officials said that the British mission was limited to providing humanitarian relief for Yazidi refugees besieged on Mount Sinjar.

Britain announced towards the end of last week that it would be prepared to arm Kurdish forces fighting the extremists.

Fallon said: "We and other countries in Europe are determined to do what we can to help the government of Iraq combat this new and very extreme form of terrorism that Isil [the Islamic State] is promoting."

The defence secretary was speaking at RAF Akrotiri in Cyprus as six Tornado fast jets and a spy plane push beyond the Kurdish region in the very north of Iraq – the focus of the humanitarian crisis – into parts of mainland northern Iraq that were taken over by Islamist militants in the past two months.

The aircraft are providing footage and other intelligence on displaced families to assist with the humanitarian effort and also on the movement of jihadis on the ground. It is studied by British analysts before being used to help Kurdish and Iraqi security forces.

British intelligence is shared directly with the US military, which has been conducting air strikes against Islamic State positions for the past 10 days.

"We are helping the Iraqi authorities and the Kurdish forces build up a better picture of where Isis is, where it is likely to strike next," Fallon said in an interview conducted by the defence editor of the Times and pooled on behalf of the major newspapers including the Guardian.

This means that British information could be used by the Iraqi military in planning attacks against jihadis – a development that brings Britain closer to a direct combat role, which could cause alarm among some MPs who are concerned about mission creep.

The Rivet Joint spy plane, a sophisticated, electronic surveillance aircraft, has been conducting missions since last week. Its information is combined with intelligence from daily patrols conducted by pairs of Tornado fighter jets, kitted with surveillance pods.

The RAF is also flying planeloads of ammunition, rifles and machine guns from former Soviet bloc countries in eastern Europe into Irbil in order to strengthen the fighting power of the Iraqi Kurdish security forces who are combatting the jihadis.

In addition, the government is looking at what British gear, such as night-vision goggles and body armour, it could send directly to the country to boost the Kurdish Peshmerga fighters.

The defence secretary praised a group of about three dozen airmen and soldiers from the various different units at the RAF base for their work in distributing aid. Fallon then signalled an expansion of the mission which could last months when he said: "This mission isn't over. The humanitarian needs are there…There may well now be in the next few weeks and months other ways that we may need to help save life, protect people. We are going to need all of you again and the surveillance you are able to give us."

The signals from Fallon of a greater British military involvement, which will stop short of deploying combat troops, came as the prime minister laid the ground for greater British military involvement in confronting Isis.

In a Sunday Telegraph article Cameron warned that Isis has declared an "extremist caliphate" that could soon lead to a "terrorist state on the shores of the Mediterranean and bordering a Nato member [Turkey]".

The prime minister, who warned of a "generational struggle" against a "poisonous and extremist ideology" that will last for the rest of his political lifetime, wrote: "I agree that we should avoid sending armies to fight or occupy. But we need to recognise that the brighter future we long for requires a long-term plan for our security as well as for our economy.

"True security will only be achieved if we use all our resources – aid, diplomacy, our military prowess – to help bring about a more stable world. Today, when every nation is so immediately interconnected, we cannot turn a blind eye and assume that there will not be a cost for us if we do."

The prime minister, who was furious when Ed Miliband blocked his plans to launch military strikes against the regime of the Syrian president Bashar al-Assad last year amid fears of a repeat of the mistakes of the invasion of Iraq in 2003, said that people should make judgments on the world of today.

He wrote: "The creation of an extremist caliphate in the heart of Iraq and extending into Syria is not a problem miles away from home. Nor is it a problem that should be defined by a war ten years ago. It is our concern here and now. Because if we do not act to stem the onslaught of this exceptionally dangerous terrorist movement, it will only grow stronger until it can target us on the streets of Britain."

Sir Menzies Campbell, the former Liberal Democrat leader, said: "The prime minister is right to emphasise that the effects of any continuing instability in Iraq will not be confined to the region. But it will be necessary to meet the challenge of terrorism by constructing a coalition of allies from both the EU and Nato. A unified approach will be essential with no room for dissent or compromise between countries. The jihadists of IS [the Islamic State] will most certainly test political resolve as well as security challenges."

In his interview the defence secretary confirmed that a small number of regular British soldiers were also sent briefly into the semi-autonomous Kurdish north of the country. The troops from 2nd Battalion the Yorkshire Regiment were flown into Arbil, the capital of Iraqi Kurdistan, last week to prepare for a possible deployment of Chinook helicopters on a mission to save families from a little-known religious sect who were stuck on a mountainside.

Deborah Haynes, defence editor of the Times, despatched a pooled contribution to this report from RAF Akrotiri in Cyprus