Ruthless jihadists spearheading a Sunni militant offensive in Iraq have declared an “Islamic caliphate” and ordered Muslims worldwide to pledge allegiance to their chief, in a spectacular bid to extend their authority.

The Islamic State of Iraq and the Levant (ISIL, also known as ISIS) renamed itself simply the Islamic State (IS) and declared its shadowy frontman the leader of the world’s Muslims, in a clear challenge to al-Qaeda for control of the global jihadist movement.

Iraqi forces meanwhile pressed a counter-offensive on Monday against executed dictator Saddam Hussein’s hometown of Tikrit, one of a string of towns and cities overrun by IS-led fighters in a swift advance that left more than 1000 people dead, displaced hundreds of thousands and piled pressure on Prime Minister Nouri al-Maliki.

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Maliki’s bid for a third term in office has been battered by the offensive and he is no longer seen as the clear frontrunner when parliament reopens on Tuesday following elections in April.

ISIL announced on Sunday it was establishing a “caliphate” – an Islamic form of government last seen under the Ottoman Empire – extending from Aleppo in northern Syria to Diyala province in eastern Iraq, the regions where it has fought against the regimes in power.

Shia tribal fighters in Iraq.

In an audio recording distributed online, the group declared its chief Abu Bakr al-Baghdadi “the caliph” and “leader for Muslims everywhere”. Henceforth, the group said, he is to be known as “Caliph Ibrahim” – a reference to his real name.

Though the move may not have immediate significant impact on the ground, it is an indicator of the group’s confidence and marks a move against al-Qaeda – from which it broke away – in particular, analysts say.

The caliphate is “the biggest development in international jihad since September 11”, said Charles Lister of the Brookings Institution in Doha, referring to the al-Qaeda attacks on the US in 2001.

“It could mark the birth of a new era of transnational jihadism … and that poses a real danger to al-Qaeda and its leadership,” he said, adding that ISIL, with members in many countries, is the richest jihadist group.

Baghdadi, thought to have been born in the Iraqi city of Samarra in 1971, is touted by the group as a battle-hardened tactician who fought American forces following the 2003 US-led invasion, and is now widely seen as rivalling al-Qaeda chief Ayman al-Zawahiri as the world’s most influential jihadist.

His group has drawn thousands of foreign fighters, attracted by a combination of Baghdadi’s own appeal, ISIL’s efforts to establish what it believes is an ideal Islamic state, and the group’s sophisticated propaganda apparatus which publishes magazines and videos in English and a host of European languages.

The group is known for its brutality, summarily executing its opponents and this week crucifying rival Islamic rebels in Syria.

Iraqi forces are hitting back at jihadist militants.

In Syria, ISIL fighters control large swathes of territory in Deir Ezzor near the Iraq border, Raqa in the north, as well as parts of neighbouring Aleppo province.

In Iraq, it has spearheaded a lightning offensive since June 9, capturing sizeable territories in the north and west of the conflict-torn country.

Iraqi forces initially wilted in the face of the onslaught but have mounted an ambitious counter-offensive to take back Tikrit, a battle which could be crucial tactically and for the morale of the security forces.

Officials said thousands of troops were advancing on Tikrit from a number of directions, while warplanes pounded the city with air strikes and clashes broke out in several areas around the city.

World leaders and religious clerics have meanwhile pushed Iraqi leaders to unite and quickly form a government, with parliament due to finally open on Tuesday, but despite the urgency, politicians have warned that the process of choose a new prime minister could take upwards of a month.