The United States is considering opening direct talks with Iran on how to counter the growing threat from Sunni militants in Iraq.
Extremists from the Islamic State of Iraq and Syria (ISIS) militants captured key cities including Mosul and Tikrit last week, but several towns have now been retaken from the rebels.
The talks with Tehran could even take place as early as this week, as the nations are due to hold the latest round of talks on Iran's nuclear programme in Vienna, the BBC reports.
Iranian President Hassan Rouhani has said he will consider co-operation if the US takes action in Iraq.
The USS George HW Bush aircraft carrier is being deployed to the Gulf, accompanied by two more warships. However, Washington says no American troops would be deployed on the ground.
Meanwhile, militants are reportedly engaged in heavy fighting with government forces in northern Iraq and around the border with Syria.
The Iraqi government said its forces have killed 279 militants in 24 hours, as they pushed back against the offensive.
'Massacre' of Iraqi soldiers
The United States has condemned as "horrifying" photos posted online by Sunni militants. Army personnel are pictured being led away and then lying in trenches before and after their "execution".
Iraqi military spokesman Lt Gen Qassim al-Moussawi was quoted as saying the pictures are authentic and depicted events in Salahuddin province, the BBC reports. But the images' authenticity has not been independently confirmed.
BBC corespondent Jim Muir is in northern Iraq and said if the photographs were genuine, they would depict by far the biggest single atrocity since the time of the American-led invasion of Iraq in 2003. He said those loyal to Prime Minister Nouri al-Maliki are pictured being led away and then lying dead in trenches.
"Up to a thousand people may be killed in this way. They were sorted out into regular foot soldiers of the Iraqi army enlisted men, who were allowed to go. But volunteers from Shi'ite militias and an elite unit close to Mr Maliki, the Golden Brigade, were taken off, trucked into the desert and then shot dead in these pits."
The pictures, apparently posted by ISIS, are said to show what happened to soldiers after the group took over an army base in Tikrit following the surrender of the garrison there.
Video footage apparently filmed earlier showed many hundreds of men being marched off from near the Speicher base, with the voice on tape saying they were soldiers who had surrendered at the facility.
Still photographs showed large numbers of young men being transported away in trucks. Captions on the photographs, which again appeared to have been issued by ISIS, said they were being taken away to their deaths. What appear to be ISIS fighters are seen firing on their captives in some images.
Embassy staff evacuated
The Australian government has started evacuating staff from its embassy in Baghdad.
Foreign minister Julie Bishop said the situation in Iraq was volatile and could deteriorate further. She advised all Australians to leave the country while the airport remains open.
Ms Bishop says Australia could offer humanitarian aid, but has not yet been asked.
The US was also reported to be evacuating staff from its embassy.