Turkey's foreign minister has confirmed that Ankara is planning to deploy troops in a 20-kilometre (12-mile) buffer zone inside northern Iraq if a "crisis situation" develops.
Gul says refugees would be kept in buffer zone
Abdullah Gul told the AP news agency that it would be a humanitarian force which would deal with any flood of refugees fleeing the Iraq conflict.
Earlier Turkish plans to move troops into Iraq have caused alarm in the US and EU.
They fear that Iraqi Kurds could fight back against the Turkish presence, sparking a "war within a war".
But there are signs that a compromise could form around the plan for a buffer zone, which Turkey says is necessary to aid any refugee crisis and protect its own security interests.
If the need is there, this is our plan
"We want to keep all of the refugees there," Mr Gul said, stressing that Turkey was keen to avoid a repeat of the refugee crisis seen in Turkey in the first Gulf War in 1991.
"This is not a populated area and this area... is for security reasons. If the need is there, this is our plan."
Asked how many soldiers Turkey deploy, Mr Gul said it would depend on "the need".
It is thought that original plans involved around 40,000 troops, but the number may now have been scaled down.
This is a difficult and complicated issue
US envoy Zalmay Khalilzad
Nato ambassadors in Brussels were briefed on the plan by Turkey's ambassador to the alliance.
A Nato spokesman said the ambassadors had noted that there was no significant refugee flow towards the border at present.
He said they would review the situation if refugees started heading for Turkey in large numbers but he added there was no guarantee that they would back Ankara's buffer zone idea
Mr Gul acknowledged that talks between Turkey and the US on the issue of a Turkish involvement in northern Iraq had not yet resulted in agreement.
No military operation
"We will continue our discussions in the coming days," said US special envoy Zalmay Khalilzad on Tuesday after a second day of talks.
"This is a difficult and complicated issue."
The United Nations is already moving aid supplies to border area
Correspondents say Turkey would reserve the right to go beyond the buffer zone if it believed Iraqi Kurds were moving towards establishing an independent state.
The US has publicly warned Turkey not to cross into Iraq.
A senior US official quoted by AP said the goal of Mr Khalilzad's talks was to keep any large concentration of Turkish troops out of the area.
The President of the European Commission, Romano Prodi, attended the meeting of the North Atlantic Council where Turkey briefed Nato ambassadors in Brussels.
An EU spokesman said Mr Prodi had been assured that Ankara had no intention of launching a military operation in Iraq.
The Commission is expected to double financial aid to Turkey this week.
Turkey has maintained a military presence in Iraq for years, in its battle against Turkish Kurdish insurgents.
It fears that moves towards Kurdish independence in Iraq could create unrest in its own Kurdish areas.
The head of the Turkish army, General Hilmi Ozkok, was inspecting troops near the border on Tuesday and Wednesday.