Sunni rebels led by the Islamic State of Iraq and the Levant have taken control of an important oil refinery and have offered Iraqi troops safe passage if they give up their weapons and leave, according to Al Jazeera sources.
Sources in Salheddin province on Tuesday said that Sunni rebels had captured the province's Baiji refinery, near the town of Tikrit.
The reports were rejected by the foreign minister, Hoshyar Zebari, who told Al Jazeera on Tuesday that Iraqi special forces soldiers were in control.
However, sources said that ISIL rebels had offered 460 Iraqi troops still near the refinery safe passage to Erbil if they gave up their weapons. The ISIL would then hand the facility to local Sunni leaders, the sources said.
Baiji refinery is Iraq's largest and produces a third of Iraq's oil output. It has been the scene of a week of fighting between Iraqi forces and Sunni fighters.
The claim comes a day after the US secretary of state, John Kerry, promised "intense and sustained" aid to help Iraq combat the Sunni rebellion during a visit to Baghdad.
However, he said Iraq must "find a leadership that was prepared to be inclusive and share power".
Kerry on Tuesday travelled to Erbil, the capital of the semi-autonomous Kurdish region, for further talks.
The US has promised to send 300 military advisers to help train government forces. On Monday, the US government announced the advisers - mostly special forces - would be granted immunity from prosecution in Iraq.
The US president, Barack Obama, has said the advisers would involved in combat.
A White House spokesman said the soldiers were "dealing with an emergency situation - that's the first part - and there is an urgent need for these advisers to be able to do their work on the ground in Iraq".
The US pulled its troops out of Iraq in December 2011 after it failed to gain immunity for a planned residual force of several thousands soldiers.
James Dubik, a retired lieutenant general who was in charge of training Iraqi forces in 2007 and 2008, told the AP news agency that the teams would focus on immediate capabilities..
"They will be very good at improving the immediate tactical proficiency of some of the Iraqi military, but they will be less prepared to address the long term health of the Iraqi army," he said, adding that the teams would be "sharpening the tip of the spear, but not replacing the rotted staff with a new one."
The US spent an estimated $8 billion on training the Iraq army between 2003 and 2012, according to the US army magazine, the Army Times.