Islamic radicals seized control of Iraq's third biggest city, Mosul on Tuesday, which triggered a refugee exodus. On seizing control the militant group freed thousands of fellow fighters in a series of jailbreaks.
The Iraqi army, which came under heavy machine gun fire and rocket-propelled grenade attacks was forced to retreat to the outskirts of the city, located 225 miles north west of Baghdad.
In addition to seizing the main governorate building - forcing the city's governor to flee - the gunmen had also gained control of three different jails according to reports. They have also seized control of numerous police stations and an airport, where several military planes and helicopters were based.
The loss of the city, home to around 1 million people, poses a major challenge to the Iraqi government, in the backdrop of revived militancy in the country.
Fleeing residents reported they saw militants raising al-Qaeda's black flags from buildings, and newly-released prisoners running through the streets in yellow jumpsuits.
The militants are said to belong to Islamic State of Iraq and the Levant (ISIL), the joint Iraqi-Syrian al-Qaida affiliate that is fighting president Bashar al-Assad's regime in neighbouring Syria.
Meanwhile, AFP quoted an interior ministry official as saying that the city of Mosul was outside the control of the state and at the mercy of the militants. It added, soldiers had fled after removing their uniforms.
BBC reported that video footage from Mosul showed militants from an al-Qaeda offshoot, ISIS, driving through the streets
Iraq's prime minister, Nouri Maliki had asked parliament to declare a state of emergency after the militants gained control of the city much of its province of Nineveh.
According to the US, ISIS threatened not just Iraq, but the entire region.
According to state department spokeswoman Jen Psaki, the situation in Mosul, Iraq's second city, was "extremely serious" and that the US supported "a strong, co-ordinated response to push back against this aggression".
The BBC quoted security sources as saying on Tuesday that fierce fighting had broken out between Iraqi forces and ISIS fighters in a town called Rashad near Kirkuk, south-east of Mosul.
In a televised announcement, Maliki said that security forces had been placed on a state of "maximum alert".
He further added that he had asked parliament to declare a state of emergency, which would broaden arrest powers and allow curfews to be imposed and civilians to be mobilised.