Iraqi and Kurdish in tense armed stand-off in oil-rich Kirkuk

Thousands of Iraqi troops and Kurdish fighters are engaged in a tense stand-off in the disputed oil-rich province of Kirkuk, as the US looks to avoid all-out war breaking out between the two sides.

Baghdad had reportedly set a 2am Sunday deadline for the Kurds to surrender positions in the province taken during the fightback against the Islamic State group over the past three years.

The face-off is taking place on either side of a river cutting through the city.

Armoured cars with the Iraq flag were positioned on the bank of a river on the southern outskirts of the city of Kirkuk, an AFP photographer reported.

Facing them, Kurdish Peshmerga fighters were visible behind an earthen embankment topped with concrete blocks painted with the red, white green and yellow of the Kurdish flag.

"Our forces are not moving and are now waiting for orders from the general staff," an Iraqi army officer told AFP, asking not to be identified.

The two sides have been at loggerheads since the Kurds voted overwhelmingly for independence in a 25 September referendum that Baghdad rejected as illegal.

Polling took place in Kurdish territories but also in adjacent Kurdish-held areas, including Kirkuk.

Iraqi Prime Minister Haider al-Abadi has rejected any discussion of the Kurds' longstanding demands to incorporate Kirkuk and other historically Kurdish-majority areas into their autonomous region until the independence vote is annulled.

He insisted on Thursday that he was "not going... to make war on our Kurdish citizens".

Yet there are thousands of Iraqi troops and fighters from the pro-government, Iran-backed Popular Mobilisation Force massed around Kirkuk.

A Kurdish forces withdrawal saw the militias take up positions around Kirkuk.

Erbil has vowed to defend the city "at any cost."

So far the front lines have been quiet but the Kurds said they had received an ultimatum to withdraw.

"The deadline set for the Peshmerga to return to their pre-June 6, 2014 positions will expire during the night," a senior Kurdish official told AFP, asking not to be identified.

Washington has military advisers deployed with both sides in the standoff and Defence Secretary Jim Mattis said on Friday that it was working to reduce tensions.

"We are trying to tone everything down and to figure out how we go forward without losing sight of the enemy, and at the same time recognising that we have got to find a way to move forward," Mattis told reporters.

"Everybody stay focused on defeating [IS]. We can't turn on each other right now. We don't want to go to a shooting situation," he added.