Heavy clashes took place between Iraqi government forces and Sunni Islamist militants who have made major advances in the past week.
Reports say parts of the city of Baquba – just 37 miles from Baghdad – have been taken over by the rebels.
The US is deploying up to 275 military personnel to protect staff at its huge embassy in the capital.
Reports from Baquba – capital of Diyala province on the northern approaches to Baghdad – say rebels are reported to have taken over several quarters and captured the main police station, seizing many weapons.
At Tal Afar, a strategic city west of Mosul in the province of Nineveh, there are reports that reinforcements have arrived to boost government forces trying to recapture the town from rebels. The Iraqi air force is said to have been carrying out strikes in the area.
The city of 200,000 people, which has a mixed Sunni and Shia population, lies between Mosul and the Syrian border and was taken just before dawn on Monday.
In Anbar province to the west of Baghdad, Sunni militants shot down a government helicopter near the city of Falluja, and say they destroyed several tanks in fighting there. They also say army forces fled from a military base near Ramadi, the provincial capital.
Qasem Suleimani, the commander of an elite unit of Iran’s revolutionary guards, is reported to be in Baghdad, helping military leaders and Shia militias co-ordinate their campaign against the rebels.
In Vienna, US officials held brief discussions about Iraq with their Iranian counterparts at a meeting about Tehran’s nuclear program, but American officials have been quick to dismiss reports of military collaboration with a major foe.
In a letter to Congress, President Barack Obama said the 275 military personnel being sent to Iraq would protect US citizens and the embassy in Baghdad, and would remain there until the security situation improved.
A White House statement said that their main role would be to help embassy staff to relocate to US consulates in the cities of Basra in the south and Irbil in the north, and provide airfield management and security.
President Barack Obama has already ruled out sending in ground troops to fight alongside Iraqi government forces, but drone strikes remain a possibility.
The aircraft carrier USS George HW Bush has been deployed to the Gulf, accompanied by two more warships.
The UN says that ISIS fighters have carried out hundreds of summary executions since their offensive began last week.
UN human rights chief Navi Pillay said that systematic killings in the north of the country “almost certainly amounted to war crimes”.
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