Paul Wood in Jalula, eastern Iraq: ''There is growing panic...they think the jihadis are coming in''
Iraqi PM Nouri Maliki has fired senior officers for failing to halt a sweeping advance by Sunni Islamist rebels.
Four army commanders were dismissed because they did not perform "their national duty", a government statement said on Tuesday.
Iraqi forces have been engaged in heavy clashes with the rebels who have seized several key cities in the past week.
The US is deploying up to 275 military personnel to protect staff at its huge embassy in the capital, Baghdad.
Mr Maliki and other senior figures of his Shia government were joined by Sunni leaders in a call for "national unity", after talks in Baghdad on Tuesday evening.
They urged Iraqis to avoid sectarian grievances and said individuals with no official state function were banned from carrying weapons.
The militants, led by the Islamic State in Iraq and the Levant (ISIS), took control of the northern cities of Mosul and Tikrit in a rapid advance last week, and Tal Afar on Monday.
They also briefly captured parts of the city of Baquba - just 60km (35 miles) from Baghdad - in an overnight assault, before government troops and allied Shia militia pushed them back on Tuesday.
Qasem Suleimani, the commander of an elite unit of Iran's revolutionary guards, is reported to be in Baghdad, helping military and Shia leaders co-ordinate their campaign against the rebels.
Many Sunnis, particularly the conservative ones who started turning against al-Qaeda eight years ago, and enabled the US forces to leave Iraq with what seemed at the time to be dignity, are not at all happy that ISIS should control their towns and villages.
But the danger of the present fight-back by Shia volunteers is that they will victimise ordinary Sunnis, and make them feel that ISIS is the only group that can protect them.
In other words, this has the potential to turn into a clear-cut religious war, with the possibility of mass "cleansing" of civilians and brutality on a large scale.
Court martial
The Iraqi officers fired on Tuesday include the top commander for Nineveh, the first province where ISIS fighters made major gains.
Another senior officer would be court-martialled in absentia for deserting his position and fleeing a battle, the government said.
Shia men are volunteering to fight for the Iraqi army in large numbers
Even very young Shias are willing to take up weapons
The announcement came as army reinforcements reportedly arrived in the strategic city of Tal Afar in Nineveh province to help recapture the town from insurgents.
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.
The Iraqi air force was said to have carried out strikes in the area.
All eyes are now on Baquba, says the BBC's Jonathan Beale in Baghdad; if the city falls to the rebels, it will give them a clear route into the capital.
The prime minister of Iraq's autonomous Kurdish region, Nechirvan Barzani, earlier told the BBC he believed Iraq might not remain united as Sunni areas felt neglected by the Shia-dominated Iraqi government.
Nechirvan Barzani, prime minister of Iraq's autonomous Kurdish region: "There is no trust right now"
The ISIS advance has also raised international concern over regional stability.
The United Nations has warned of "a real risk of further sectarian violence on a massive scale in Iraq and beyond its borders".
ISIS fighters have been accused of carrying out hundreds of summary executions since their offensive began last week, and Sunni militants have posted photos online appearing to show fighters carrying out massacres of captured Iraqi soldiers.
US Vice-President Joe Biden said on Tuesday "urgent assistance [was] clearly required", but stressed that Iraqis had to "pull together to defeat this enemy".
UN Secretary General Ban Ki-moon: Iraq's government should reach out for "inclusive dialogue"
Although Washington has already ruled out sending in ground troops to fight alongside Iraqi troops, drone strikes remain a possibility.
The aircraft carrier USS George HW Bush has been deployed to the Gulf, along with two other US warships.
Earlier, US officials also held brief discussions about Iraq with their Iranian counterparts at a meeting in Vienna about Tehran's nuclear programme. However, the US authorities were quick to dismiss reports of military collaboration with a major foe.
In other developments:
- The Iraqi government issued a statement on Tuesday accusing neighbouring Saudi Arabia of supporting the insurgents and providing them with financial support - allegations Riyadh has rejected
- Turkey has relocated its consulate staff from the southern Iraqi city of Basra to Kuwait because of an increased security risk, its foreign minister has said
- At least eight civilians have been reportedly killed and several others injured when a suicide bomber blew himself up at a market selling army uniforms and equipment in central Baghdad
ISIS grew out of an al-Qaeda-linked organisation in Iraq
- Estimated 10,000 fighters in Iraq and Syria
- Joined in its offensives by other Sunni militant groups, including Saddam-era officers and soldiers, and disaffected Sunni tribal fighters
- Exploits standoff between Iraqi government and the minority Sunni Arab community, which complains that Shia Prime Minister Nouri Maliki is monopolising power
- ISIS led by Abu Bakr al-Baghdadi, obscure figure regarded as a battlefield commander and tactician
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