By Isabel Coles

ARBIL Iraq (Reuters) - The president of Iraq's autonomous Kurdish region asked its parliament on Thursday to plan a referendum on Kurdish independence, signaling his impatience with Baghdad, which is fighting to repel Sunni insurgents and struggling to form a new government.

The move came despite U.S. pressure for Kurds to stand with Baghdad as Iraq faces an onslaught by Sunni Muslim militants, led by an al Qaeda offshoot, which has seized large parts of the north and west and is threatening to march on the capital.

Iraq’s 5 million Kurds, who have governed themselves in relative peace since the 1990s, have expanded their territory by as much as 40 percent in recent weeks as the sectarian insurgency has threatened to split the country.

Kurdish President Massoud Barzani asked lawmakers to form a committee to organize a referendum on independence and pick a date for the vote.

"The time has come for us to determine our own fate and we must not wait for others to determine it for us," Barzani said in a closed session of the Kurdish parliament that was later broadcast on television.

"For that reason, I consider it necessary ... to create an independent electoral commission as a first step and, second, to make preparations for a referendum."

Barzani's call came days after Kurds and Sunnis walked out of the newly elected Iraqi parliament’s first session in Baghdad, complaining that the majority Shi’ites had failed to nominate a prime minister.

Many Kurds have long wanted to declare independence and now sense a golden opportunity, with Baghdad weak and Sunni armed groups in control of northern cities such as Mosul and Tikrit.

Top U.S. defense officials, who have deployed advisers to the region to assess the state of the Iraqi military, said the security forces were able to defend Baghdad but would have difficulty going on the offensive to recapture lost territory, mainly because of logistical weaknesses.

"If you're asking me will the Iraqis at some point be able to go back on the offensive to recapture the part of Iraq that they've lost, I think that's a really broad campaign quality question," General Martin Dempsey, chairman of the U.S. Joint Chiefs of Staff, told reporters at the Pentagon. "Probably not by themselves."

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Dempsey said "the future is pretty bleak" for Iraqis unless they can bridge the sectarian differences within their government. The absence of an inclusive government, he said, was a factor in the security forces' failure to stand up to ISIL.

"They didn't collapse in the face of a fight. They collapsed in the face of a future that didn't hold out any hope for them," Dempsey said.

Unless the Iraqi government bridges internal sectarian differences and "gets the message out that it really does intend to allow participation by all groups, everything we're talking about (doing to help) makes no difference," he said.

Many see the Shi'ite prime minister, Nuri al-Maliki, as the main obstacle to resolving the crisis and hope he will step aside.

"POLITICAL STABILITY NEEDED"

Maliki himself said a political solution went hand-in-hand with the campaign to recapture areas held by insurgents.

“There is no security without complete political stability,” he said in a televised address on Wednesday. “We will proceed with our political projects but we will be on high alert and ready for the momentum of the battle."

Security forces are battling fighters led by the Islamic State, which shortened its name from the Islamic State in Iraq and the Levant this week and named its leader "caliph," the historical title of successors of the Prophet Mohammad who ruled the Muslim world.

Rising concern and pressure from the United States, Iran, the United Nations and Iraq's own Shi'ite clerics has done little to end the paralyzing divisions between Iraq's main ethnic and sectarian blocs.

Mithal al-Alusi, a prominent Sunni politician, said he did not think Maliki was prepared to step aside. “Mr. Maliki wants to continue and he believes ... that without him nothing can be done in Iraq,” he said.

In the system put in place after the United States toppled Saddam Hussein in 2003, the premiership is traditionally given to a Shi'ite, while the speaker of the house has been a Sunni and the president, a largely ceremonial role, has been a Kurd.

In his weekly televised address, Maliki said he hoped parliament could get past its "state of weakness" and reach consensus in its next session, planned for Tuesday. But it is far from clear when leaders in Baghdad might do so.

All the main blocs are beset by internal divisions, and none has yet decided who to put forward for its designated position.

Dia al-Asadi, secretary general of the Al-Ahrar bloc, a Shi'ite faction loyal to powerful cleric Moqtada al-Sadr and opposed to Maliki, told Reuters that only Maliki’s own State of Law coalition would support his staying on as prime minister.

“There is objection by almost all of the other groups - the Kurds, the Sunnis, and the other Shi’ites," he said.

Each of the blocs has said it wants to know who the others will choose for their posts before naming its own - meaning the nominations will have to be done as a package.

FIGHTING IN DIYALA

Maliki's government, bolstered by civilian volunteers and Shi'ite militias, has managed to stop the militant advance short of the capital, but has been unable to take back the cities that government forces abandoned.

The army failed last week to take back Tikrit, 160 km (100 miles) north of Baghdad, and remained on the outskirts of the city on Thursday, according to the prime minister's military spokesman Lieutenant General Qassim Atta.

In the northeasterly province of Diyala, 14 militants were killed in fighting with security forces, local police said.

The head of the region's police, Jamil Al-Shimmeri, said security forces had taken back control of the village of Showhani near the town of Muqdadiya, 80 km northeast of Baghdad.

Insurgents have been present in Diyala for the past several weeks, following their rapid seizure of Mosul, one of Iraq's largest cities, to the north.

U.S. Defence Secretary Chuck Hagel said the U.S. military had six assessment teams on the ground evaluating the state of Iraqi forces and had established Iraqi-U.S. joint operations centers in Baghdad and Arbil to coordinate activities.

Saudi-owned al-Arabiya television said Saudi Arabia had deployed 30,000 soldiers to its border with Iraq after Iraqi soldiers withdrew from the area, but Iraq denied the report.

Al-Arabiya broadcast footage of what it said were Iraqi soldiers in the desert area east of the city of Karbala after pulling back from the border. But the army spokesman said the border was still under the full control of Iraqi forces.

(Reporting by Isabel Coles in Arbil, Isra' al-Rubei'i,; Raheem Salman, Maggie Fick and Alexander Dziadosz in; Baghdad and David Alexander in Washington; Writing by Maggie Fick; Editing by Kevin Liffey and Lisa Shumaker)