The accord was first discussed on Wednesday in talks between visiting Iraqi Interior Minister Jawad al-Bolani and Turkey's Besir Atalay, after which a senior member of the Iraqi delegation said the signing would take place on Thursday.

But the convoluted negotiations were complicated by differing stands.

"There are differences and we are trying to overcome them," Iraqi ambassador to Anakara Sabah Omran said Thursday afternoon.

An Iraqi official, Aydin Halid, later told the Anatolia news agency the agreement would now be signed on Friday at 11:00 (0800 GMT) by the Turkish and Iraqi interior ministers.

Ankara has threatened a military incursion to strike at bases of the separatist Kurdistan Workers' Party (PKK) in neighbouring northern Iraq if Baghdad and Washington fail to curb the rebels, who have stepped up attacks inside Turkey this year.

Iraqi Kurds, who run northern Iraq and have been accused by Ankara of tolerating and even aiding the PKK, have raised objections to a key provision in the draft agreement, the NTV news channel reported.

The provision would reportedly allow Turkey -- with prior Iraqi authorisation -- to conduct "hot pursuit", or small-scale military operations across the border to hunt down militants of the PKK.

The Iraqi side has also resisted committing to extradite to Ankara senior PKK members wanted by Interpol, NTV said.

Turkey says the PKK, listed as a terrorist group by Ankara, Washington and much of the international community, enjoys free movement in northern Iraq, where it obtains weapons and explosives.

Turkey has accused the forces of Massud Barzani, who heads the autonomous Kurdish administration there, of tolerating the group and even providing it with weapons, possibly including ammunition received from the United States.

In August, Iraqi Prime Minister Nuri al-Maliki and his Turkish counterpart Recep Tayyip Erdogan signed a memorandum of understanding on security cooperation against alleged terrorist groups, among them the PKK, that paved the way for an agreement.

"We wish that this cooperation starts without delay... Terrorism should not hamper the development of our relations," Maliki said at the time.

But observers here doubt whether Maliki's embattled government, which has virtually no authority in northern Iraq, can cajole the Iraqi Kurds into action against the PKK, whose 23-year armed campaign for self-rule in southeast Turkey has resulted in more than 37,000 deaths.

In June, the Turkish army said there were some 5,000 PKK rebels in total, an estimated 2,800 to 3,100 of them based in northern Iraq.

The PKK has notably stepped up its attacks in the east and southeast of Turkey this year and, in response, the army has reinforced its units in the region and amassed troops on the border with Iraq.

Washington has warned Ankara against an incursion into northern Iraq, wary that it may destabilise a relatively peaceful region of the country and fuel fresh tensions between Turkey and the Iraqi Kurds, staunch US allies.

Turkey also suspects Iraqi Kurds of harbouring designs to break away from Baghdad, which it fears would embolden the PKK's separatist campaign.