Islamist militant group ISIS says it is establishing a caliphate, or Islamic state, on the territories it controls in Iraq and Syria.
The Islamic State in Iraq and Syria proclaimed the group's leader, Abu Bakr al-Baghdadi, as caliph and "leader for Muslims everywhere".
An image taken from a video uploaded to the internet by ISIS allegedly shows them in vehicles near Tikrit. Photo: AFP
His appointment as Caliph raises major theological and ideological questions for other Islamist jihadists in the region and may be seen by al-Qaeda as a direct challenge to it, Radio New Zealand's correspondent in north Iraq reports.
This comes as Iraqi government forces attempt to re-take the city of Tikrit, which fell to ISIS rebels earlier in June and as Shia, Sunni and Kurdish political leaders attempt to nominate cabinet positions in government ahead of a meeting of Iraq's parliament due on Tuesday.
Setting up a caliphate ruled by the strict Islamic law has long been a goal of many jihadists, the BBC reports.
ISIS made the announcement in an audio recording posted on the internet. It said the Islamic state would extend from Aleppo in northern Syria to Diyala province in eastern Iraq.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu has expressed support for the establishment of an independent Kurdistan in northern Iraq to strengthen resistance to ISIS and jihadism in the Middle East, the BBC reports.
In a speech in Tel Aviv, he said the Kurds "are a nation of fighters and have proved political commitment and are worthy of independence."
Senior US senator Diane Feinstein has described the advance of ISIS as the most serious development yet in the crisis. The chair of the Senate Intelligence Committee called the group vicious and savage, but said it would be wrong for American ground troops to return to Iraq.
Ms Feinstein said she hopes neighbouring Iran would put pressure on Iraq's Shia Prime Minister, Nouri al-Maliki, to make his government more acceptable to Sunnis and Kurds.
Fighting continues in Tikrit
Government forces are continuing an offensive to retake the northern city of Tikrit from the Sunni rebels. Aircraft have struck at rebel positions and clashes have broken out in various parts of the city, witnesses and officials have said.
Troops had reportedly pulled back to the nearby town of Dijla as Saturday's initial offensive met stiff resistance, according to the BBC.
The city of Tikrit was captured by Sunni rebels on 11 June as they swept across large parts of northern Iraq.
"The security forces are advancing from different areas", Lt-Gen Qassem Atta told journalists. "There are ongoing clashes."
There was fighting in the northern Qadissiyah district, near the university where troops established a foothold in the city a few days ago, witnesses told the Associated Press.
An unnamed official also told the agency of clashes around an air base formerly used by the US military, Camp Speicher.
Heavy fighting took place on Saturday between the Iraqi security forces and armed men from different factions controlling Tikrit, resulting in many casualties on both sides, eyewitnesses and journalists told the BBC.
Insurgents led by ISIS were reported to have shot down a helicopter and captured the pilot.
The witnesses said the Iraqi forces had been hampered in their bid to retake Tikrit by the large number of improvised explosive devices laid on the approaches to the city.
But Lt-Gen Atta said that during Sunday's offensive many of the devices had been detonated.
Meanwhile, Iraq said it had received the first batch of military jets ordered from Russia in order to help fight the militants. The defence ministry said five Sukhoi aircraft would enter service in "three to four days".
Displaced Iraqis who fled the violence near Tikrit take refuge in a school in Cardagli Erkek, south of Kirkuk. Photo: AFP