Iraqi forces are regaining towns previously held by insurgents but may soon call for support from the United States and Australia.
The Sunni militant group known as the Islamic State of Iraq and the Levant (ISIL) has taken over key cities in northern Iraq and is in striking distance of the capital Baghdad.
Prime Minister Tony Abbott has warned Iraq could become a terrorist state if the militants take the capital, which would be a security disaster for the Middle East and the wider world.
But Iraqi ambassador to Australia, Mouayed Saleh, says his country is dealing with the problem on its own for the moment.
“A couple of days ago, the army started taking control of the areas and started waging attacks on the terrorist groups … freeing some towns, some people and squeezing the terrorist group in certain areas,” he told reporters in Canberra on Tuesday.
“We don’t see it to that extent,” he said.
Iraq could eventually need outside assistance from countries such as the US and Australia in terms of intelligence, air strikes and long-range patrol aircraft.
“When the time comes to ask for that, I’m sure we’re going to ask for that and some other things that we’re going to be needing,” the ambassador said.
The Australian government has begun withdrawing embassy staff from Baghdad and has contingency plans in place.
Foreign Minister Julie Bishop says the government’s focus is on ensuring diplomatic staff are safe and that the thousands of Australians in Iraq receive the message that they should leave.
“This is a very fluid situation,” she told Sky News.
The US has announced it will deploy about 275 military personnel to help protect its embassy and help American officials.
Ms Bishop says the government is assessing what humanitarian support could be provided, such as shelter, food and water but no request had yet come from Iraq.
The US would take any lead in terms of intelligence or air support, she said.
Opposition Leader Bill Shorten, who met members of the Assyrian community on Tuesday, told the Labor caucus that Iraq was a giant humanitarian disaster.
“Any steps need to be carefully considered and in the Australian national interest,” he said.
Former intelligence analyst and now independent MP Andrew Wilkie unsuccessfully moved a motion in parliament to rule out sending Australian combat troops back into Iraq.
Greens MP Adam Bandt supported the motion arguing that military intervention would not bring about democracy.
– with AAP