An unfounded report Wednesday that thousands of troops had penetrated into Kurdish-controlled northern Iraq created turmoil in Turkey as it awaits early general elections on July 22 after emerging from its worst political crisis in nearly five years.

Foreign Minister Abdullah Gul denied the report, but hinted that such an incursion could take place if Washington and Baghdad fail to end the activities of the Kurdistan Workers' Party (PKK) separatists based in northern Iraq.

Turkey says the PKK, whose 22-year insurgency in eastern and southeastern Turkey has claimed more than 37,000 lives so far, is acting under the protection of Iraqi Kurds allied to the United States.

Violence increased with the spring thaw as rebels hiding in the rugged mountains of the region launched attacks on security forces while others infiltrated Turkey from their northern Iraqi bases, effectively ending a unilateral cease-fire the PKK proclaimed in October 2006.

Turkey launched several cross-border operations into Iraq in the 1990s, but failed to dislodge rebels based there.

It maintains a 1,500-strong presence several kilometres (miles) inside Iraqi territory to prevent the PKK infiltrating along the mountainous, 384-km (240-mile) border.

Ankara continues to pressure the United States and Iraq to act against the PKK and maintains its threat of taking action itself if they fail to do so.

But the United States, while asserting its opposition to the PKK, strongly opposes such action, saying it does not want to see relatively peaceful northern Iraq thrown into turmoil like the rest of the war-torn country.

"We don't want any more promises, we want action," an angry Prime Minister Recep Tayyip Erdogan said Wednesday, calling the autonomous Kurdish region's president Massud Barzani, whom Turkey accuses of protecting the PKK, a "tribal leader."

Barzani responded on Thursday with a warning that "a Turkish invasion would be first of all an attack on Iraqi sovereignty and then an attack on the Kurds."

In a communique posted on its website early Friday, the Turkish general staff called on Turks to "react against the separatist and racist terrorist organization."

As the diplomatic battle raged between Ankara, Washington and Baghdad, the army pursued its offensive to curb the PKK on Turkish soil.

Media estimates say 67 rebels were killed since violence escalated last month, but the army has also suffered heavy losses.

Even more troubling for many than the fighting in the remote mountains was a suicide bombing in a busy downtown Ankara shopping district last month blamed on the PKK, which claimed eight lives, including the bomber, and wounded 120.

Southeast Turkey remained under emergency rule from 1984, when the PKK uprising began, until 2002.

Now, five years later and for three months until September 9, the army has set up a no-go security zone along a wide, mostly uninhabited swathe of land along the border whose airspace will be closed to civilian flights.

"This is a show of force -- one stage in crisis management," commented Ercan Citlioglu, an analyst who specializes in the PKK. "It means, 'If diplomacy fails, we'll go in' (to Iraq). But we aren't there yet.

"The legal groundwork for an incursion into Iraq has not been laid," he said, referring to the need for parliament to authorise the government to send Turkish troops abroad.

But no parliamentary authority is needed for small military units to briefly cross into Iraq in hot pursuit of rebel forces -- something, he says, that happens on a regular basis.