President Barack Obama: ''American forces will not be returning to combat in Iraq but we will help Iraqis as they take the fight to terrorists''
President Barack Obama says the US will send 300 military advisers to Iraq to help fight Islamist-led insurgents.
Mr Obama said the US was prepared for "targeted and precise military action, if and when... the situation on the ground requires it", but added that US troops would not fight in Iraq.
He went on to insist there was "no military solution" and urged the Shia-led Iraqi government to be "inclusive".
Iraq has asked the US for air strikes against the Sunni militants.
The gunmen - spearheaded by the jihadist Islamic State of Iraq and the Levant (ISIS) - have made major territorial gains in the past 10 days.
Mr Obama said it was not the US's place to choose Iraq's leaders.
By Frank Gardner, BBC security correspondent
There is little left of the original al-Qaeda organisation as founded in 1989 by Abdullah Azzam and Osama Bin Laden in the wake of the Soviet Union's withdrawal from Afghanistan. Bin Laden himself was tracked down and killed in Pakistan in 2011.
What is left of "Core al-Qaeda", as it is known, is believed to be based in Pakistan's tribal region after fleeing Afghanistan in 2001.
But the world's counter-terrorism officials have little cause to celebrate.
Rather than eliminating al-Qaeda, they have caused it to atomise and disperse, morphing into several different organisations around the Middle East, Africa and Asia, with large numbers of jihadist sympathisers in Europe.
That may be seen as a veiled criticism of Shia Prime Minister Nouri Maliki, who has been accused of anti-Sunni policies which have helped inflame unrest, correspondents say.
"The United States will not pursue military actions that support one sect inside of Iraq at the expense of another," Mr Obama said.
In addition to sending advisers, Mr Obama said that the US would be increasing intelligence efforts and setting up "joint operation centres in Baghdad and northern Iraq, to share intelligence and co-ordinate planning".
Thousands of Shias from southern Iraq have volunteered to help the Iraqi army.
Shia militiamen have been sent to assist in the defence of the capital of Diyala province, which has effectively become a front line, and the nearby city of Samarra, site of a major Shia shrine.
On Wednesday, the chairman of the US Joint Chiefs of Staff, Gen Martin Dempsey, warned that the US military still lacked sufficient intelligence to take action. He told a congressional hearing that pilots would have difficulty knowing who they were attacking from the air.
Gen Dempsey went on to say there was "very little that could have been done to overcome the degree to which the government of Iraq has failed its people. That is what has caused this problem".
Iraq's sectarian split
Members of Iraq's Shia majority community have volunteered to fight alongside the security forces- Sunnis and Shia share fundamental beliefs, but differ in doctrine, ritual, law, theology and religious organisation
- The origins of the split lie in a dispute over who should have succeeded the Prophet Muhammad as leader of the Muslim community
- Sunnis are the majority sect in the Muslim world, but Shia, most of them ethnic Arabs, form between 60% and 65% of Iraq's population; Sunnis make up 32-37%, split between Arabs and Kurds
- Sunni Arabs dominated Iraq under Saddam Hussein and their persecution of the Shia stoked sectarian tensions; the US-led invasion in 2003 gave the Shia an opportunity to seek redress
- Nouri Maliki has been accused of denying Sunni Arabs meaningful representation and pursuing security policies that target them
This satellite image, taken on Thursday, shows smoke billowing from the Baiji refinery in northern Iraq
Panic buying fuel
Mr Obama's statement came after a day in which fighting continued for control of the country's biggest oil refinery.
Officials insisted security forces were "in full control" of the Baiji refinery, about 200km (130 miles) north of the capital Baghdad.
But militants led by ISIS have surrounded the facility.
For several days, production has been halted at Baiji, which supplies much of the country's domestic fuel.
The shutdown has sparked panic buying in northern regions, with long queues at petrol stations in Iraqi Kurdistan, even thought there are not yet any real shortages, the BBC's Jim Muir reports from Irbil.
Hostilities were also reported elsewhere in the north and west of the country on Thursday, including around the airport of the strategic town of Tal Afar.
Police told the BBC that ISIS-led militants had killed 13 police officers and Kurdish peshmerga militiamen while capturing the village of Bayshir, south of the strategically important northern city of Kirkuk, over the past two days.
ISIS in IraqThe rebels now control the northern cities of Mosul and Tikrit
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, an obscure figure regarded as a battlefield commander and tactician
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