The two countries pledged to "prevent the activities of terrorist organisations and primarily the PKK," Turkish Interior Minister Besir Atalay said after he and Iraqi counterpart, Jawad Al-Bolani, signed the accord at the end of three days of thorny negotiations.

Turkey says the separatist Kurdistan Workers' Party (PKK) enjoys free movement in northern Iraq, where it has long taken refuge, and obtains weapons and explosives there for attacks across the border. The PKK is listed as a terrorist group by Turkey, the United States and much of the international community,

Atalay said, however, the two sides failed to agree on a proposed provision concerning "the strengthening of security and cooperation in border areas" and that negotiations would continue.

A draft provision sought by Ankara would have reportedly allowed Turkey -- with Iraqi authorisation -- to conduct "hot pursuit", or small-scale military operations across the border to hunt PKK militants.

But the Iraqi Kurds, who run northern Iraq and have been accused by Ankara of tolerating and even aiding the PKK, raised objections to the provision, according to media reports.

Ankara has threatened unilateral military action into northern Iraq if Baghdad and Washington fail to curb the PKK.

"We cannot accept any of our neighbours being subjected to a threat originating from our country. You can be assured that the necessary measures will be taken," Bolani said.

Other provisions called for blocking financial and logistical support for terrorist groups and preventing their means of propaganda and political activities, Atalay said.

The deal envisages judicial cooperation against terrorist groups as well as the capture of their members and their prosecution or extradition, he said.

Turkish and Iraqi officals will meet every six months to assess progress under the agreement.

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

Turkish observers doubt whether the embattled government in Baghdad, 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 left more than 37,000 dead.

A senior Turkish diplomat involved in the talks said Ankara was satisfied with the agreement, but critics were pessimistic.

"This agreement is useless, it is a strategy to distract" Turkey, retired general Necati Ozgen, who has experience in fighting the PKK, said.

Prior to the US-led invasion of Iraq in 2003, Turkey carried out incursions into northern Iraq, but with the consent of the Iraqi Kurds.

Their relations however have badly deteriorated since then amid Turkish suspicions that Iraqi Kurds are seeking to form their own state, emboldening the PKK's separatist campaign.

In June, the Turkish army said there were some 5,000 PKK rebels in total, with 2,800-3,100 based in northern Iraq.

The PKK has stepped up its attacks in the southeast this year. The army has reinforced units in the region and amassed troops on the Iraqi border.

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.