President Barack Obama says the US will send 300 military advisers to Iraq to help fight Islamist-led insurgents.
Mr Obama said the US was prepared for “targeted and precise military action, if and when… the situation on the ground requires it”, but added that US troops would not fight in Iraq.
He went on to insist there was “no military solution” and urged the Shia-led Iraqi government to be “inclusive”.
Iraq has asked the US for air strikes against the Sunni militants.
The gunmen – spearheaded by the jihadist Islamic State of Iraq and the Levant (ISIS) – have made major territorial gains in the past 10 days.
Mr Obama said it was not the US’s place to choose Iraq’s leaders.
That may be seen as a veiled criticism of Shia Prime Minister Nouri Maliki, who has been accused of anti-Sunni policies which have helped inflame unrest, correspondents say.
“The United States will not pursue military actions that support one sect inside of Iraq at the expense of another,” Mr Obama said.
In addition to sending advisers, Mr Obama said that the US would be increasing intelligence efforts and setting up “joint operation centres in Baghdad and northern Iraq, to share intelligence and co-ordinate planning”.
Thousands of Shias from southern Iraq have volunteered to help the Iraqi army.
Shia militiamen have been sent to assist in the defence of the capital of Diyala province, which has effectively become a front line, and the nearby city of Samarra, site of a major Shia shrine.
On Wednesday, the chairman of the US Joint Chiefs of Staff, Gen Martin Dempsey, warned that the US military still lacked sufficient intelligence to take action. He told a congressional hearing that pilots would have difficulty knowing who they were attacking from the air.
Gen Dempsey went on to say there was “very little that could have been done to overcome the degree to which the government of Iraq has failed its people. That is what has caused this problem”.
Panic buying fuel
Mr Obama’s statement came after a day in which fighting continued for control of the country’s biggest oil refinery.
Officials insisted security forces were “in full control” of the Baiji refinery, about 200km (130 miles) north of the capital Baghdad.
But militants led by ISIS have surrounded the facility.
For several days, production has been halted at Baiji, which supplies much of the country’s domestic fuel.
The shutdown has sparked panic buying in northern regions, with long queues at petrol stations in Iraqi Kurdistan, even thought there are not yet any real shortages, the BBC’s Jim Muir reports from Irbil.
Hostilities were also reported elsewhere in the north and west of the country on Thursday, including around the airport of the strategic town of Tal Afar.
Police told the BBC that ISIS-led militants had killed 13 police officers and Kurdish peshmerga militiamen while capturing the village of Bayshir, south of the strategically important northern city of Kirkuk, over the past two days.