"There are some differences. We are trying to work them out," said Iraq's ambassador to Turkey, Sabah Omran, adding that it was unclear whether the agreement could be inked on Thursday, Anatolia news agency reported.

When asked if a pact could be forged by Thursday, Omran said: "It's not yet sure."

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

"We have come to a good stage," in the discussions, Bolani said but added that the two sides "need more time. The negotiations will continue and we will consult Baghdad."

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.

The talks resumed Thursday after Iraqi Kurds, who run northern Iraq and have been accused by Ankara of tolerating and even aiding the PKK, raised objections to a key provision in the draft, 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.