Iraqi soldiers backed by Shi'ite militias fought Sunni rebels for control of a military base northeast of Baghdad as a UN envoy warned of chaos if divided lawmakers did not make progress on Sunday towards naming a government.

Forces loyal to Prime Minister Nuri Al-Maliki launched an early morning push to repel Islamic State militants who fought their way on Thursday into a military base on the edge of Muqdadiya, 80 km (50 miles) northeast of the capital.

Heavy fighting raged for hours and continued on Saturday afternoon, local security sources said.

Sources at the morgue and hospital in the nearby town of Baquba said they had received the bodies of 15 Shi'ite militia fighters transferred after the morning's fighting.

State TV also reported 24 "terrorists" had been killed. Seven civilians including children from nearby villages were killed by helicopter gunship fire, police and medics said.

The Sunni militants had moved towards the base after seizing the town of Sadur just to the north, another security source and witnesses said. They were equipped with artillery and mortars and drove vehicles including captured tanks and Humvees.

In the western city of Falluja, a hospital received three bodies and 18 wounded people on Saturday after army helicopters bombed the city, government health official Ahmed Al-Shami said.

Kurdish peshmerga security forces attacked Islamic State positions in Jalawla late on Friday, killing at least 15 militants and three Kurdish security personnel, spokesman Halgurd Hikmat said. The town, in the eastern province of Diyala near the Iranian border, was seized by insurgents last month.

Bickering lawmakers in Baghdad are under pressure from the United States, the United Nations and Iraq's own Shi'ite clerics to form a new government swiftly to deal with the Sunni insurgency, which seized territory in the north and west last month, and has held it in the face of ground and air attacks.

Few doubt an inclusive government is needed to hold Iraq together, but there is no consensus on who should lead it.

The national parliament elected in April met for the first time on July 1 but failed to agree on nominations for the top three government posts.

The UN special envoy to Iraq, Nickolay Mladenov, said the country could plunge into chaos if parliament fails to move forward on a government in the next session now set for Sunday.

He also urged lawmakers to turn up, after fewer than a third attended the first session when Sunnis and Kurds walked out after Shi'ites failed to nominate a premier to replace Maliki.

US Vice President Joe Biden talked on Saturday with Masoud Barzani, president of the Iraqi Kurdistan Region, and discussed the need for the quick formation of a government and peaceful resolution of territorial disputes, the White House said.

With politics in Baghdad paralysed, and Maliki continuing in a caretaker role, the fighting raged on.

The death toll rose to 30 on Saturday from a suicide bomb attack on Friday at a Kurdish-controlled checkpoint in Kirkuk province, where families fleeing violence in Tikrit and other areas overrun by militants last month were waiting to pass.

SUNNIS NAME SPEAKER NOMINEE

Maliki's opponents accuse him of ruling for the Shi'ite majority at the expense of the Sunni and Kurdish minorities, and want him to step aside. But he shows no sign of quitting. His State of Law coalition is the biggest group in the Shi'ite National Alliance bloc.

Under a system created after the removal of Saddam Hussein in 2003, the prime minister has always been a member of the Shi'ite majority, the speaker of parliament a Sunni and, with one exception, the occupant of the largely ceremonial presidency has been a Kurd.

In a sign of progress on Saturday night, the main Sunni political coalition chose lawmaker Salim Al-Jabouri, a moderate Islamist, as its nominee for parliament speaker, a senior Sunni politician said.

The naming of the speaker in Sunday's session would be the first step in naming a government more than three months after national elections.

After the speaker is named, parliament has 30 days to name a president and the president has 15 days to nominate a prime minister. But there is much pressure from Shi'ite clerics and the international community to announce all three top posts as a "package" amid fear of the country's fragmentation.

The move appeared to be a goodwill gesture by the Sunni bloc to overcome the impasse, but nothing is sure before Sunday's session because of the volatile political situation. - Reuters