Jihadists at Baghdad gates

Islamic State gunmen are continuing their sweep across Iraq and are poised at the gates of a town just north of Baghdad, despite US air strikes intended to thwart the extremists' advance.

Commanders from the fundamentalist militia are massing near Qara Tappa, just 110km north of the capital, according to Iraqi security sources and a local official.

The move threatens to broaden the front against Peshmerga troops, who in recent days have been routed from battlefields across northern and western Iraq.

The development came as clashes erupted west of Baghdad and the UN announced its highest level of humanitarian emergency for the crisis-hit country.

Fighting broke out in Fallujah, just 64km west of the capital. At least 15 people were killed, including four children, when extremist Sunni gunmen battled Iraqi troops on the city's outskirts.

The US announced that on Mount Sinjar, where the world's gaze has been focused on the plight of the refugee Yazidi community, a recently dispatched assessment team had found "far fewer" refugees than previously feared.

Disputing accounts from the UN refugee agency, which had estimated that there could be tens of thousands of Yazidis trapped in the area and surrounded by Islamic State fighters, Pentagon officials said there were about 4000.

There had been reports that a rescue team, comprising US Marines and special forces units, would be mounting an operation to save the stranded Yazidis.

British Prime Minister David Cameron had also promised to "get these people off that mountain".

But Justine Greening, the international development secretary, indicated today that Britain would not involve itself without the Americans.

The Obama administration is trying to persuade Iraq's prime minister designate, Haidar al-Abadi, to move swiftly to form a broad-based government that can unite Iraqis in the fight against the Islamic State.

Al-Abadi, whose nomination was accepted by President Fouad Massoum earlier this week, has 30 days to build a team that will face the daunting task of defusing sectarian tensions and, in the words of US President Barack Obama, convincing the Sunni Arab minority that Islamic State "is not the only game in town".

Incumbent Prime Minister Nouri al-Maliki has defied growing international pressure to step aside.

His intransigence has raised fears of more turmoil if the stand-off continues.