Iraq said it believed the threat of a major Turkish offensive against Kurdish guerrillas in northern Iraq had diminished despite Turkey's vow of a military operation.
Turkish Prime Minister Tayyip Erdogan had said the army would go ahead with an operation after his talks with U.S. President George W. Bush on Monday to push Washington to crack down on Kurdistan Workers Party (PKK) separatists based in Iraq.
But Erdogan did not specify the size of any operation against some 3,000 guerrillas using northern Iraq as a base for attacks in Turkey.
Iraqi Foreign Minister Hoshiyar Zebari said the threat of a big offensive appeared to be lower after Erdogan's talks with Bush, a weekend meeting of Iraq's neighbours in Istanbul and Baghdad's "tangible and serious measures" against the PKK.
"A major military incursion into northern Iraq, and major is the key word, the chances of that are less," Zebari told Reuters on Tuesday.
In response to what it sees as foot-dragging by Iraq and a lack of pressure from the United States, Turkey has mustered 100,000 troops on the border with Iraq and threatened to go after the PKK if nothing is done to rein them in.
The United States is against Turkey sending thousands of troops across the border, fearing it could destabilise northern Iraq and cause a bigger regional crisis. It has not opposed limited military strikes.
Bush said after meeting Erdogan that he was committed to countering the PKK, which he called their "common enemy" and offered to share intelligence with Turkey, a NATO ally.
Although the talks were unlikely to be enough to stop Turkey from pursuing a military offensive, it could be limited to air strikes and special operations, Turkish diplomats said.
"The U.S. has agreed to give Turkey 'actionable intelligence' and that means allowing us to take military action against the PKK once we have real time information," a Turkish diplomat told Reuters.
Turkey is a crucial ally for Washington, which uses Incirlik air base to provide logistical support for its forces in Iraq.
Erdogan said in Washington late on Monday that action was planned against the PKK, considered a terrorist organisation by the United States, the European Union and Turkey.
"We are not on the eve of a war. We have made a decision on an operation. I want to stress once again that what we will do is an operation," he told the National Press Club.
Turkey's parliament last month approved a government request to permit major military cross-border operations into northern Iraq against the PKK in response to an escalation in deadly attacks by the rebels against soldiers and civilians.
Turkey's lira firmed 1.7 percent against the dollar as a big offensive looked less likely after the meeting in Washington.
"Although the meeting did not meet the expectations of the Turkish public, I think it satisfied the expectations of the government," Faruk Logoglu, an influential former Turkish ambassador to Washington, told Reuters .
"It's highly possible for Turkey to do some limited operations in the short term; either air strikes or some pinpoint operations by the Turkish special forces against PKK camps in northern Iraq," he said.
An escalation in separatist attacks in recent weeks has sparked a public outcry in Turkey with mounting calls for an offensive against the militants in northern Iraq.
Iraq has pledged to arrest PKK leaders. But Baghdad has little influence over the semi-autonomous Kurdish region. Authorities there have closed the offices of a party linked to the PKK and set up roadblocks to stop supplies to the rebels.
Erdogan said he had given Bush a list of five demands he wanted the United States to take against the PKK. These included shutting down PKK camps and cutting off logistical support.
"We got what we wanted," Erdogan said. "Nobody is telling us not to do an operation," he added.
The PKK took up arms against Turkey in 1984 with the aim of creating an ethnic homeland in the southeast. Nearly 40,000 people have been killed in the conflict.