The National Security Council (MGK), which comprises Turkey's president, senior ministers and military chiefs, said in a statement that it had discussed "the terror threat directed at our country from the north of Iraq".

This was a reference to the Kurdish leadership of neighbouring northern Iraq, where separatist Turkish Kurd rebels fighting the Ankara government have long taken refuge.

It had also reviewed "political, economic and other approaches to be followed from now on," the statement added.

The council met amid simmering anger here over remarks by Massud Barzani, head of the autonomous Kurdish region in northern Iraq.

He was quoted at the weekend as threatening to interfere in adjoining southeast Turkey, where a two-decade Kurdish rebellion has already claimed about 37,000 lives.

Barzani suggested that Iraqi Kurds would fan unrest in the region if Ankara continued to oppose Iraqi Kurdish claims on the oil-rich Iraqi city of Kirkuk.

Iraqi President Jalal Talabani, also a Kurd, expressed "regret over the latest statements by Massud Barzani" in a telephone call to Prime Minister Recep Tayyip Erdogan late Monday, Erdogan's spokesman said.

"Talabani underlined that they place great importance to ties with Turkey," Mehmet Akif Beki told AFP.

Erdogan warned on Monday that hostility toward Turkey could result in a "very heavy cost" for Iraqi Kurds in the future. Barzani had "overstepped the line", he said.

Turkey says the referendum on Kirkuk's future status, scheduled to be held this year, should be postponed, arguing that thousands of Kurds have been moved into the city to change its demography.

The ethnically volatile city is also home to Arabs and Turkish-speaking Turkmen, backed by Ankara.

Turkey worries that Kurdish control of Kirkuk and its vast oil reserves would embolden what it believes are Kurdish ambitions to break away from Baghdad.

Kurdish independence, it fears, could fuel the separatist insurgency in southeast Turkey, led by the Kurdistan Workers' Party (PKK), which is listed as a terrorist group by Ankara and much of the international community.

Turkey charges that Iraqi Kurds tolerate, and even support, thousands of PKK rebels who have found refuge in the mountains of northern Iraq.

It has long pressed Baghdad and Washington to crack down on PKK camps in the region, where it says the rebels are able to obtain weapons and explosives for attacks on Turkish targets across the border.

Ankara has threatened a military incursion into northern Iraq to pursue the PKK if Baghdad and Washington fail to act against them.

Talabani told Erdogan during their telephone conversation that "they were ready to fight against the PKK as part of a common plan with Ankara," Beki said.

The US says it is working to curb the PKK through non-military means such as cutting off its financial resources.

The MGK statement said Tuesday that the Turkish army would "continue with determination its operations" against the PKK.