Baghdad on Sunday evening accused Kurdish forces of making a "declaration of war" after claiming PKK fighters were among Kurdish forces in a standoff with its army in the disputed oil province of Kirkuk.

The National Security Council, headed by Iraqi Prime Minister Haider al-Abadi, said it viewed as a "dangerous escalation" and a "declaration of war" the presence of "fighters not belonging to the regular security forces in Kirkuk" including fighters from Turkey's outlawed Kurdistan Workers' Party (PKK).

"The central government and regular forces will carry out their duty of defending the Iraqi people in all its components including the Kurds, and of defending Iraq's sovereignty and unity," it added.

The PKK have manned several positions around Kirkuk since 2014.

On Sunday, Kurdish Peshmerga fighters rejected a warning from an Iraqi paramilitary force to withdraw from a strategic junction south of Kirkuk, which controls the access to some of the region's main oilfields, a Kurdish security official said.

Last week, Peshmerga forces rushed reinforcements to the oil-rich city in response to reports that Iraqi Security Forces and Shi’a Popular Mobilisation Forces (PMF) were preparing an attack.

If the PMF attacks the Kurds, “it won’t be good for them,” said Peshmerga commander Kemal Kirkuki .