Turkey's government is coming under pressure to launch a cross-border operation against Kurdish militants operating from northern Iraq.
Prime Minister Recep Tayyip Erdogan has agreed to give the US 'a few days' in which to move against the outlawed Kurdish Workers Party, the PKK.
Ankara estimates there are 3,000 PKK rebels based in northern Iraq fighting for autonomy in southeastern Turkey.
Its military has deployed as many as 100,000 troops, backed by tanks and attack helicopters, along the border.
The US fears a Turkish military strike into northern Iraq could further destabilise the region.
However Mr Erdogan is to chair a weekly cabinet meeting today which will to focus on the escalating PKK violence.
In Baghdad, ministers addressed parliament in a crisis session as pressure mounted on the government to rein in the Kurds or face the increasingly likely prospect of a Turkish incursion.
Defence Minister Abdel Qader al-Obeidi, Foreign Minister Hoshyar Zebari and the National Security Minister Shirwin al-Waili were outlining government moves to prevent the incursion and crack down on the rebels.
The closed-door meeting was called after Saturday night's clash increased tension between Baghdad and Ankara.
Turkey says the fighting erupted in a mountainous region in the southeastern province of Hakkari after PKK rebels infiltrated from northern Iraq and attacked a patrol.
But Iraqi President Jalal Talabani yesterday rejected the idea that Kurdish rebel leaders holed up in the rugged border region could be rounded up and handed over, as the Turkish prime minister has demanded.
In Istanbul, about 3,000 flag-waving demonstrators took to the streets again today, chanting slogans against the PKK in a second day of protest at the deaths of 12 soldiers in an ambush near the Iraqi border .
Thousands of people took to the streets throughout Turkey in spontaneous demonstrations yesterday, hours after the PKK attack.