Turkey and Iraq have agreed to work together to deal with the problem of Kurdish PKK rebels in northern Iraq.
Turkish Foreign Minister Ali Babacan said Ankara would put the emphasis on diplomatic means to solve the crisis.
Mr Babacan rejected any ceasefire with the PKK, saying this was not possible with a "terrorist organisation".
Turkey is coming under intense pressure from the public and military to use force against the PKK, after its parliament approved cross-border raids.
Prime Minister Recep Tayyip Erdogan said Turkey had no territorial designs on Iraq but could use military force against the PKK "at any time" if Baghdad failed to act.
"We cannot wait for ever," he said, at a news conference with UK Prime Minister Gordon Brown in London.
Turkey, along with the US and EU, considers the PKK to be a terrorist organisation.
In the last week, Turkey has been building up its military presence on the border with Iraq and, on the other side, PKK rebels have stepped up their attacks against Turkish troops in the region.
The rebels claim 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.
The funerals of the dead are expected to take place on Tuesday.
Mr Babacan said Turkey respected the territorial integrity of Iraq as a matter of principle, but the fight against terrorism was also a matter of principle.
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
However, every effort would be made to avoid cross-border military action.
"There are political dialogue, diplomacy, economic and cultural tools as well as military measures," he said after talks with Iraqi Foreign Minister Hoshyar Zebari.
"We do not want to sacrifice our cultural and economic relations with Iraq..."
But Mr Babacan said Turkey would not consider a ceasefire with the rebels, following reports that the PKK might agree to stop fighting.
"Ceasefires are possible between states and regular forces - the problem here is that we're dealing with a terrorist organisation," he said.
Mr Zebari said his country would actively help Turkey deal with the PKK "menace".
"We agreed that the position we should take is a common position to fight terrorism wherever it is and we will not allow any party or any group, including the PKK to poison our bilateral relations," he said.
A delegation of senior Iraqi government officials is expected to travel to Ankara in the coming days to agree on measures that are being described as practical and concrete.
The talks came after the US urged Iraq to take swift action against the insurgents to forestall the threatened Turkish raids.
Iraqi Prime Minister Nouri Maliki agreed to work with the Turkish government to prevent the PKK from using Iraqi territory to plan or carry out terrorist attacks, a White House statement said.
Ankara wants to see PKK camps closed down and the group's commanders arrested and handed over.