The crisis is raising fears of fresh chaos in Iraq just as the country's forces are on the verge of routing the Islamic State group from the last territory it controls in the country.
Kurdish forces, who were key allies in the US-backed offensive against IS, are refusing to surrender positions they took during the fightback against the jihadists over the past three years.
Iraq's central authorities had demanded the Kurds withdraw from disputed areas overnight but the deadline was extended by a day following talks.
Iraqi President Fuad Masum, himself a Kurd, was meeting today with Iraqi Kurd leader Massud Barzani in Dukan in Sulaimaniyah province, officials said.
The peshmerga forces based in Kirkuk are mainly loyal to Masum's Patriotic Union of Kurdistan (PUK) of party, a rival of Barzani's Kurdistan Democratic Party (KDP). Representatives of both parties were taking part in the talks.
Iraqi and peshmerga forces could be seen early today still facing off in positions on the outskirts of Kirkuk, though there were no signs of troop movements.
As well as heavily armed federal troops, members of the Hashed al-Shaabi, or Popular Mobilisation forces, which are dominated by Iran-backed Shiite militias, have massed around Kirkuk.
Armed Kurdish civilians were seen gathering in Kirkuk overnight and Kirkuk governor Najm Eddine Karim, a Kurd sacked by Baghdad but who refuses to quit his post, warned: "Residents will help the peshmerga... we will not allow any force to enter our city."
Kirkuk, long claimed by the Kurds as part of their historic territory, has emerged as the main flashpoint in the dispute.
Polling during the September 25 referendum was held not only in the three provinces of the autonomous Kurdish region but also in adjacent Kurdish-held areas, including Kirkuk, that are claimed by both Baghdad and Iraqi Kurdistan.
The referendum, which was non-binding and saw voters overwhelmingly back independence, was declared illegal by Baghdad and held despite international opposition.
The Kurds control the city of Kirkuk and three major oil fields in the province.
The three fields produce some 250,000 barrels per day, accounting for 40 per cent of Iraqi Kurdistan's oil exports.
They would provide crucial revenue to Baghdad, which has been left cash-strapped from the global fall in oil prices and three years of battle against IS.
Iraqi Prime Minister Haider al-Abadi said this week that he was "not going... to make war on our Kurdish citizens" but has also rejected any negotiations until the independence vote is annulled.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.