Saudi Arabia gave an apparent warning to arch enemy Iran on Wednesday by saying outside powers should not intervene in the conflict in neighbouring Iraq.

Foreign Minister Prince Saud Al-Faisal also said Iraq was facing a full-scale civil war with grave consequences for the wider region.

His remarks coincided with an Iranian warning that Tehran would not hesitate to defend Shi'ite Muslim holy sites in Iraq against "killers and terrorists", following advances by Sunni militants there.

The toughening of rhetoric about Iraq by the Gulf's two top powers suggested that Tehran and Riyadh have put on hold recent plans to explore a possible curbing of their rivalry across the region's Sunni-Shi'ite sectarian divide.

The Sunni-Shia edge to the Saudi-Iran struggle has sharpened in the last few years.

Iraq's Prime Minister Nuri Al-Maliki, an ally of Iran, has appealed for national unity with Sunni critics of his Shi'ite-led government after a stunning offensive through the north of the country by Sunni Islamist militants over the past week.

Maliki has accused Saudi Arabia of backing the militants of the Islamic State of Iraq and the Levant (ISIL), who want to carve out a Sunni caliphate in the heart of the Middle East.

Speaking at a gathering of Arab and Muslim leaders in Jeddah, Prince Saud urged nations racked by violence to meet the "legitimate demands of the people and to achieve national reconciliation (without) foreign interference or outside agendas".

"This grave situation that is storming Iraq carries with it the signs of civil war whose implications for the region we cannot fathom," he said.

"INTERNAL DISTURBANCE"

He did not elaborate but the remarks appeared aimed at Shi'ite Iran, which is also an ally of the government of Syrian President Bashar Al-Assad.

The prince said the three-year-old civil war in Syria, where a largely Sunni Muslim uprising has failed to unseat Assad, had "helped to deepen the internal disturbance in Iraq".

On Monday, Saudi Arabia blamed the Iraqi crisis on Maliki, citing what it called years of "sectarian and exclusionary policies" by his government against Iraq's Sunni minority.

Maliki and several Iranian officials have for months alleged that several Gulf governments support ISIL.

And on Saturday, Iran's President Hassan Rouhani said that "terrorist groups" were getting financial and political backing and weaponry from countries in the region and powerful Western states. He named no countries, but was alluding in part to Sunni Gulf Arabs.

Western diplomats say it is private Gulf donors who appear the more likely source of ISIL's funding from the Gulf.

While the Saudi government has yet to specifically condemn ISIL by name, the group is no friend of Riyadh's, having battled the kingdom's allies in infighting among Sunni rebels in Syria.

Riyadh last month designated ISIL a terrorist organisation, underscoring concern that young Saudis hardened by battle could come home to target the ruling Al Saud family - as happened after the wars in Afghanistan and Iraq.

Saudi Arabia and Iran had begun in recent months to explore ways to lower the temperature of what is widely seen as the region's most destructive bilateral relationship. - Reuters