Iraqi security forces have battled rebels targeting the country's main oil refinery and have claimed to regain partial control of a city near the Syrian border, trying to blunt a week-long offensive by armed fighters who diplomats fear may have abducted some 100 foreign workers.

"We have now started our counter-offensive, regaining the initiative and striking back," Nouri al-Maliki, Iraqi prime minister, said on Wednesday.

Maliki's relatively upbeat assessment came as the military claimed its forces regained parts of the strategic city of Tal Afar near the Syrian border, which ISIL fighters captured on Monday. Its closeness to the Syrian border strengthens the armed group's plan to carve out an "Islamic emirate" stretching across the Iraq-Syria border.

Also on Wednesday, Iraqi government forces repelled an attack by rebels on the country's largest oil refinery at Beiji, some 250 kilometres north of Baghdad, said Lieutenant General Qassim al-Moussawi, the chief military spokesman.

Moussawi said 40 attackers were killed in fighting there overnight and on Wednesday morning. There was no independent confirmation of his claims, nor those on the Iraqi military retaking neighbourhoods in Tal Afar.

In Salaheddin province, the rebels seized three villages, Albu Hassan, Birwajli and Bastamli, in northern Iraq on Wednesday during clashes with Iraq's security forces and residents. The fighting left at least 20 civilians dead, Shallal Abdul Baban, a local official, said on Wednesday.

Later on Wednesday, the United Arab Emitate recalled its envoy from Iraq and slams 'sectarian' policies.

Call for arms

The president of Iraq's autonomous Kurdish region called on Wednesday on all retired members of the Peshmerga military to contact their former units to support their defence of the region, the Deutsche Presse-Agentur news agency reported.

"As a result of the current situation along the Kurdistan Region borders, and in order to defend our people and to safeguard the achievement of the people of Kurdistan, it is the duty of all the people of the Kurdistan Region to demonstrate their support to the Peshmerga and security forces of Kurdistan," Massoud Barzani said.

Meanwhile, the Turkish Foreign Ministry said its diplomats were investigating claims that militants abducted 60 foreign construction workers, including some 15 Turks, near the oil city of Kirkuk in northern Iraq. The claims were based on a Turkish private Dogan news agency report that cited an unnamed worker who was reportedly freed by the rebels.

In New Delhi, Syed Akbaruddin, a spokesman for the Indian Foreign Ministry, said that 40 Indian construction workers had been kidnapped in Iraq.