"Vital areas" of the city of Mosul have been seized, Iraq's prime minister said
More than 150,000 people have been forced to flee Iraq's second city of Mosul after Islamist militants effectively took control of it.
Troops were among those fleeing as hundreds of jihadists from the ISIS group overran it and much of the surrounding province of Nineveh.
Iraqi PM Nouri Maliki responded by asking parliament to declare a state of emergency to grant him greater powers.
The US said the development showed ISIS is a threat to the entire region.
US State department spokeswoman Jen Psaki said the situation in Mosul was "extremely serious" and that the US supported "a strong, co-ordinated response to push back against this aggression".
A spokesman for UN Secretary-General Ban Ki-moon said he was "gravely concerned" at the situation.
He encouraged the Iraqi government and the Kurdish regional government to cooperate in restoring security to region.
If ISIS were to develop firm control of the city they would have replicated their success in seizing an administrative and economic capital in Syria's Raqqa province.
In fact, a consolidated ISIS caliphate in western Mosul - with a population of over a million people - would be a far greater success than anything the movement has achieved in Syria and would send shock waves throughout the region.
For this reason we can expect hard fighting to follow as the Iraqi government uses every resource at its disposal - military forces, new local militias, air power, Iranian-backed Shia volunteers from southern militias, the Kurdish Peshmerga plus US intelligence and logistical support.
The battle for Mosul is shaping up to be a critical test of the political and military vitality of the Iraqi state.
Probably only a political-military solution supported by all of Iraq's factions can restore the situation but it is too soon to gauge whether the Iraqi government recognises this reality.
Kurdistan's prime minister issued a statement appealing to the UN refugee agency for help
Dozens of Iraqi military vehicles were destroyed on roads in and around the northern city of Mosul
Residents said jihadist flags were flying from buildings and that the militants had announced over loudspeakers they had "come to liberate Mosul".
"The situation is chaotic inside the city and there is nobody to help us," said government worker Umm Karam. "We are afraid."
Many police stations were reported to have been set on fire and hundreds of detainees set free.
"The army forces threw away their weapons, changed their clothes, abandoned their vehicles and left the city," Mahmud Nuri, a resident fleeing Mosul, told the AFP news agency.
Meanwhile, the Turkish consulate in Mosul confirmed reports that 28 Turkish lorry drivers had been abducted by militants in Nineveh province.
Footage shows ISIS militants driving through the streets of Mosul
Sources have told BBC Arabic that the tens of thousands of fleeing refugees are heading to three towns in the nearby region of Kurdistan where authorities have set up temporary camps for them.
Kurdistan Prime Minister Nechirvan Barzani issued a statement appealing to the UN refugee agency for help.
Security sources told the BBC that fierce fighting had erupted between Iraqi forces and ISIS (Islamic State in Iraq and the Levant) fighters in a town called Rashad near Kirkuk, south-east of Mosul.
There were also reports that jihadists had seized other areas of Kirkuk and two towns in the neighbouring Salaheddin province.
In a televised announcement, Mr Maliki said that security forces had been placed on a state of "maximum alert".
He also said he had asked parliament to declare a state of emergency - which would broaden arrest powers and allow curfews to be imposed - and a "general mobilisation" of civilians.
Nouri Maliki: "The seriousness of the situation needs swift measures"
ISIS has been informally controlling much of Nineveh province for months and in the past week has attacked cities and towns in western and northern Iraq, killing scores of people.
After five days of fighting, they took control of key installations in Mosul, which has a population of about 1.8 million.
Hundreds of cars carrying Mosul residents caused a giant traffic jam outside the nearby city of Erbil
The Iraqi government is struggling with a surge in sectarian violence that killed almost 800 people, including 603 civilians, in May alone, according to the UN. Last year, more than 8,860 people died.
The offensive by ISIS fighters has been advancing in both Iraq and neighbouring Syria, capturing territory in a campaign to set up a militant enclave straddling the border.
Parts of Ramadi, the capital of Anbar province, and much of the nearby city of Falluja have been under the control of ISIS and its allies since late December, something that Mr Maliki has been unable to reverse.
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