Iraq has urged Turkey's government to be "wise and patient" after it said it would seek MPs' permission for military action against Kurdish rebels in Iraq.
Iraqi Prime Minister Nouri Maliki said he was prepared to conduct "urgent talks" to defuse the crisis and said a diplomatic solution had to be found.
Iraq signed a counter-terrorism pact with Turkey last month, but opposes any military incursion into its territory.
The US has also warned Ankara against ordering any incursions into Iraq.
"We all have an interest in a stable Iraq and a desire to see the Kurdistan Workers Party (PKK) brought to justice," White House National Security Council spokesman Gordon Johndroe said.
"But we urge the Turks to continue their discussions with us and the Iraqis and to show restraint from any potentially destabilising actions."
Soon after the Turkish cabinet agreed to submit a motion to parliament seeking authorisation for military action, an Iraqi government spokesman called on Ankara to be "wise and patient" and not to enter Iraqi territory.
"The Iraqi government calls on the Turkish government to pursue a diplomatic solution and not a military solution to solve the [problem] of terrorist attacks which our dear neighbour Turkey has witnessed from the PKK," Ali al-Dabbagh said.
Earlier, Mr Maliki said he was prepared to conduct urgent talks with the Turkish government to "discuss and solve all outstanding problems and give guarantees that will govern relations between the two neighbouring nations".
"We are fully confident that our friends in the Turkish government are committed, just as it is our wish, to bolstering and developing our bilateral relations on the basis of mutual respect, non-intervention in the other's internal affairs and not allowing the harmful use of each other's territory," he said in a statement.
Ankara claims the PKK is a terrorist group that enjoys free movement in northern Iraq and blames it for the deaths of at least 15 Turkish soldiers in the past two weeks.
Deputy Prime Minister Cemil Cicek said the Turkish government hoped it would not be forced to resort to military action, even if its motion gained approval in parliament.
The PKK wants more autonomy in south-eastern Turkey
"We hope that there will be no reason to use the authorisation, we hope there will be no need for that," he said at a news conference.
Mr Cecik said that if approved, the measures would be valid for a year and would allow multiple cross-border operations.
He also stressed that Turkey would only target the PKK and had no intention of occupying Iraqi territory.
"We have always respected the sovereignty of Iraq, which is a friendly and brotherly country," he added.
The government plans to put the motion to a vote on Wednesday and Prime Minister Recep Tayyip Erdogan's AK Party, which has a majority, is expected to vote in favour.