The US is sending more than 200 troops to protect embassy staff in Iraq, as ISIS militants continue to make gains north and west of the capital Baghdad.

In a letter to Congress this morning, president Barack Obama confirmed about 275 military personnel began deploying on Sunday "for the purpose of protecting US citizens and property".

Mr Obama, who has previously ruled out sending US ground troops back into combat in Iraq, said the new deployment would be "equipped for combat" and would "remain in Iraq until the security situation becomes such that it is no longer needed."

The White House said the troops would help relocate some embassy staff from Baghdad to the consulates in Erbil and Basra, as well as Amman.

Analysis: Correspondent Matt Brown Sorry, this video has expired Matt Brown reports from Erbil ISIS militants are in the town of Tal Afar, which is not exactly on the border but between Mosul, which fell to the ISIS insurgents last week, and the Syrian border. It's really important because of that location it provides a conduit, if they control it for a good period of time, between their two main areas of operation (Syria and Iraq). It's been a battle for a couple of days now, and whilst the government has said that it's in control and, as I understand it, a government general responsible for the town is still saying that, the residents are saying that ISIS is sweeping through the town and those claims of control are also deeply undermined by the reports that tens of thousands of people are fleeing the city.

Sunni militants from the Islamic State of Iraq and Syria (ISIS) have routed Iraq's army and seized the north of the country in the past week, threatening to dismember the nation and unleash all-out sectarian warfare with no regard for national borders.

This morning ISIS fighters reportedly took control of Tal Afar, a key city near the border with Syria.

Residents and local officials said ISIS had routed government forces in the town, which sits between the Syrian border and Mosul, which ISIS overran last week.

Meanwhile the US confirmed earlier reports that officials had met with Iranian representatives to discuss the crisis in Iraq.

The meeting occurred on the sidelines of talks about Iran's nuclear program in the Austrian capital Vienna.

A US official told Reuters such talks would not include military coordination and would not make "strategic determinations" over the heads of Iraqis.

The US and Iran, who have not had diplomatic relations for 30 years, are both deeply concerned about the situation in Iraq, which pits the radical Sunni insurgents against the Iranian-backed Shiite government of prime minister Nouri al-Maliki.

Earlier US secretary of state John Kerry said air strikes were one option on the table as Mr Obama met his national security team this morning (Australian time).

"They're not the whole answer, but they may well be one of the options that are important," Mr Kerry said.

The USS George HW Bush aircraft carrier has been sent to the Persian Gulf to bolster US strike power in the region.

Britain rules out military intervention

British foreign secretary William Hague has spoken with his Iranian counterpart amid reports that Tehran is considering providing military support to the Shiite-led administration in Iraq.

Earlier, Mr Hague insisted Britain would not intervene militarily to help Iraq fight the Islamist insurgents.

"We are not planning a military intervention by the UK in this situation," he said.

Asked whether Britain could participate in air strikes, Mr Hague said he "could not be clearer" that this would not happen.

"The United States is much more likely to have the assets and capabilities for any outside intervention."

But first and foremost, the onus lay on the Iraqi security forces to stabilise the situation, he said.

Sunni revolt not just about ISIS extremists, say sheikhs

Iraq's besieged government has begun mobilising thousands of volunteers as it tries to hurl back the Sunni extremists who have stormed across the country.

Government forces have been counter-attacking in the crucial belt of territory north and north-east of Baghdad, where ISIS has penetrated within striking distance of the capital.

But some Sunni leaders in the country are claiming that the militant breakout is broader than just ISIS, saying a wider Sunni alliance is in play against the Shiite-led government.

Former vice-president Tariq al-Hashimi, who was once the country's most senior Sunni politician, says Sunni tribes and ex-military officers who served in Saddam Hussein's army are also playing a very important role.

Senior tribal sheikhs from Anbar province, where the uprising began at the start of this year, have told the ABC that less extreme Sunnis form the bulk of the revolt.

Amid continuing concerns that the insurgents may penetrate as far as Baghdad, the United Nations said it was relocating 58 of its Baghdad-based staff to Jordan's capital Amman, and said it may relocate more people in the coming days.

Abbott warns Iraq may become 'terrorist state'

Iraq's ambassador to Australia, Mouayed Saleh, says the military is regaining some ground against extremists in the country's north.

"A couple of days ago, the army started taking control of the areas and started waging attacks on the terrorist groups ... freeing some towns, some people and [squeezing] the terrorist group in certain areas," he said.

Sorry, this video has expired Iraq not calling on Australian help yet: Ambassador ( Kim Landers )

The ambassador says so far, Iraq has not officially requested help from the United States or Australia, but that may change.

"To tell you the truth, failure is not an option today, not for the Iraqi people. We may need help with intelligence, air strikes as part of it," he said.

"The reason for that [is] probably going to be justified soon based on the assessment plans on the ground by the Iraqi government and military."

Yesterday Prime Minister Tony Abbott described the situation in Iraq as a humanitarian disaster and warned it may lead to the creation of a terrorist state.

Mr Abbott told Federal Parliament yesterday that ISIS was acting with "maximum violence, terror and brutality".

His remarks came after pictures of what appeared to be the execution of hundreds of prisoners were posted online by ISIS.

The incident appeared to have taken place when the militants took over a military base in Tikrit after the garrison there surrendered.

ABC/wires