Turkey has said it will exhaust all diplomatic solutions before sending troops into Iraq to stop cross-border attacks by Kurdish PKK fighters.
Turkish troops made large incursions into Iraq in the 1990s
Foreign Minister Ali Babacan made the announcement as he prepared to travel to Baghdad for talks with senior Iraqis, including PM Nouri Maliki.
The US has again urged Iraq to take swift action against the insurgents to forestall the threatened Turkish raids.
Turkey's UN envoy has warned that his country's patience has its limits.
The PKK has reportedly claimed to have captured several Turkish troops following an attack on Sunday that left 12 soldiers dead. The Turkish military has only confirmed that eight soldiers are still missing.
There has been expectation in Iraq that the PKK will shortly announce a ceasefire, but previous truces have not been acknowledged by Turkey.
Turkish Prime Minister Recep Tayyip Erdogan is meeting his UK counterpart, Gordon Brown, in London on Tuesday for scheduled talks.
'What other option?'
Mr Babacan has been on a tour of the Middle East to set out Ankara's position.
Formed in late 1970s
Launched armed struggle in 1984
Dropped independence demands in 1990s
Wants greater autonomy for Turkey's Kurds
Leader Abdullah Ocalan arrested in 1999
Ended five-year ceasefire in 2004
"Our preference is diplomacy but the military option is no doubt a method in the struggle against terrorism," he said in Ankara on Monday night.
Turkey's envoy to the UN, Baki Ilkin, told the BBC that Turkish patience would not last for ever.
"Iraq has to do something," he said on the World Tonight programme on Radio Four.
"...We have incursions into Turkish territory. We cannot get our hands on them, because they immediately go back to northern Iraq...
"If we can't put our hands on these... terrorists while they are in Turkey, what option do we have?"
Speaking at an Oxford University debate on Monday night, Prime Minister Erdogan reportedly said cross-border military action might be taken "in the next few days" in the absence of "expected developments".
Speaking via a secure video link between the White House and Baghdad on Monday, Mr Maliki agreed with Mr Bush to "work together, in co-operation with the Turkish government, to prevent the PKK from using any part of Iraqi territory to plan or carry out terrorist attacks", a White House statement said.
"We want the Iraqi government to take swift action to stop the activity of the PKK," White House spokesman Tony Fratto said afterwards.
"We do not want to see wider military action on the northern border."
Mr Bush also spoke to Turkish President Abdullah Gul, telling him of his "deep concern" at recent PKK attacks.
Earlier, the office of Iraqi President Jalal Talabani, himself a Kurd, said the PKK would offer a truce shortly.
Sunday's deadly PKK ambush near the Iraqi border has inflamed public opinion in Turkey, with the media and opposition leaders calling for immediate strikes against the rebels.
Last week, the Turkish parliament approved raids into Iraq and up to 100,000 soldiers, backed by tanks, fighter jets and helicopters, have been deployed along the border.
PKK sources reported heavy Turkish shelling of rebel positions after Sunday's ambush but there were no reports of an incursion.