Washington deployed some 275 military personnel to protect its embassy in Baghdad, the first time it has publicly bolstered the mission's security.
It was also mulling air strikes against the militants, who are led by the jihadist Islamic State of Iraq and the Levant (ISIL) but include loyalists of now-executed Sunni Arab dictator Saddam Hussein.
A relative calm in Baghdad -- ostensibly as militants have focused on their northern assault -- was shattered by a string of bombings that left 17 people dead, while the bodies of 18 soldiers and police were found near the city of Samarra, shot in the head and chest.
More than a week after insurgents launched their lightning assault, Prime Minister Nuri al-Maliki dismissed several senior security force officers, including the top commander for Nineveh province in the north, the first to fall.
Maliki also ordered that one of the officers he fired face court-martial for desertion.
The dismissals came after soldiers and police fled en masse as insurgents swept into Nineveh's capital Mosul, a city of two million people, abandoning their vehicles and uniforms.
Doubts over capabilities
As officials trumpet a counter-offensive, doubts are growing that Iraq's security forces can hold back the militant tide.
After taking Mosul, militants captured a major chunk of mainly Sunni Arab territory stretching towards the capital.
The offensive has displaced hundreds of thousands of people and sent jitters through world oil markets as the militants have advanced ever nearer Baghdad leaving the Shiite-led government in disarray.
Officials said on Tuesday that militants briefly held parts of the city of Baquba, just 60 kilometres (40 miles) from the capital.
They also took control of most of Tal Afar, a strategic Shiite-majority town between Mosul and the border with Syria, where ISIL also has fighters engaged in that country's three-year-old civil war.
The overnight attack on Baquba, which was pushed back by security forces but left 44 prisoners dead at a police station, marked the closest the fighting has come to the capital.
In Tal Afar, militants controlled most of the town but pockets of resistance remained.
Further south, security personnel abandoned the Iraqi side of a key crossing on the border with Syria, officers said.
Syrian rebels opposed to ISIL were then able to seize the Iraqi side of the Al-Qaim crossing as well.
Elsewhere, a cameraman was killed and a correspondent wounded while covering the unrest, their television channel said.
'Life-threatening for Iraq'
The swift advance of the militants has sparked international alarm, with UN envoy to Baghdad Nickolay Mladenov warning that Iraq's territorial integrity was at stake.
"Right now, it's life-threatening for Iraq but it poses a serious danger to the region," Mladenov told AFP.
"Iraq faces the biggest threat to its sovereignty and territorial integrity" in years.
The violence has stoked regional tensions, with Iraq accusing neighbouring Saudi Arabia on Tuesday of "siding with terrorism" and of being responsible for financing the militants.
The comments came a day after the Sunni kingdom blamed "sectarian" policies by Iraq's Shiite-led government for triggering the unrest.
The prime minister of Iraq's autonomous Kurdish region told the BBC it would be "almost impossible" for the country to return to how it was before the offensive, and called for Sunni Arabs to be granted an autonomous region of their own.
Alarmed by the collapse of much of the security forces in the face of the militant advance, foreign governments have begun pulling out diplomatic staff.
US President Barack Obama announced that around 275 military personnel "equipped for combat" were being deployed to Iraq to help protect the embassy in Baghdad and assist US nationals.
Washington has already deployed an aircraft carrier to the Gulf, but Obama has ruled out a return to combat in Iraq for US soldiers.
As the US weighed its next move, Secretary of State John Kerry said on Monday that drone strikes could be used, while congressional leaders are due to meet with Obama on Wednesday to discuss Iraq's deteriorating security.
Washington has ruled out cooperating militarily with Tehran, but the two governments -- which have been bitter foes for more than 30 years -- held "brief discussions" on the crisis in Vienna.
The jihadists are said to have killed scores of Iraqi soldiers as they pushed their advance, including in a "horrifying" massacre in Salaheddin province that has drawn international condemnation.
Top Shiite cleric Grand Ayatollah Ali al-Sistani has called for volunteers to join the battle against the militants and thousands have signed up.
Some have returned home from neighbouring Syria, where they had been fighting alongside government forces against mainly Sunni rebels there, a monitoring group said.