The head of Iraq's Kurdish regional government has refused to meet the US secretary of state because of the US position on Turkish cross-border raids.
Turkish troops have been massed on the Iraqi border
Massoud Barzani had been scheduled to meet Condoleezza Rice in Baghdad, but withdrew "as a sign of protest" after several villages were bombed on Sunday.
The air strikes on alleged positions of PKK separatist rebels were followed by an incursion by 300 troops on Tuesday.
They moved 3km (1.9 miles) over Iraq's border, but later reportedly withdrew.
The UN refugee agency, the UNHCR, has said almost 2,000 people in northern Iraq have fled their homes in recent days as a result of the Turkish operations.
'Sign of protest'
Speaking to reporters in the northern Iraqi city of Irbil, the prime minister of the Kurdistan Regional Government, Nechirvan Barzani, said its president had refused to meet Ms Rice because of Washington's tolerance of the recent Turkish raids.
"It was decided that Massoud Barzani would go to Baghdad to take part in a meeting with Condoleezza Rice and other officials, but he will not go now as a sign of protest against the American position on the bombings by Turkey," he said.
"It is unacceptable that the United States, in charge of monitoring our airspace, authorised Turkey to bomb our villages," he added.
Following the Turkish air strikes on Sunday, the US embassy in Baghdad denied that US military commanders had approved the attacks, but admitted they had been informed they would take place.
After meeting Iraqi officials in Baghdad, Ms Rice said the US, Turkey and Iraq shared a common interest "in stopping the activities of the PKK".
She argued that the separatist rebel group threatened to undo the progress that has been made in northern Iraq.
"This is a circumstance in which the US has constantly counselled that we need an overall comprehensive approach to this problem and that no one should do anything that threatens to destabilise the north," she said.
Her Iraqi counterpart, Hoshyar Zebari, who is a member of Mr Barzani's Kurdish Democratic Party (KDP), said the Iraqi government remained concerned about the threat to civilians in the north.
But he noted that the recent Turkish raids had been in sparsely populated areas.
Iraqi officials have said the Turkish air strikes on Sunday targeted 10 villages and killed one woman. The PKK has reported seven deaths.
'Whatever is necessary'
Earlier, Turkish Prime Minister Recep Tayyip Erdogan re-asserted his country's right to defend itself from attacks by the PKK.
''We are using our rights based on the international law against a terrorist organisation," he told a news conference in Ankara.
"Our army is doing whatever is necessary. Our security forces will continue to do whatever is necessary," he added, echoing comments made by President Abdullah Gul.
MOUNTING BORDER TENSION
7 Oct PKK rebels kill 13 Turkish troops near Iraqi border
17 Oct - Turkish MPs allow military operations in Iraq
21 Oct - 12 Turkish troops die in PKK ambush near Iraqi border
30 Nov - Turkish cabinet backs PKK pursuits in Iraq
13 Nov - Turkey shells PKK targets in Iraq, Baghdad says
1 Dec - Turkish army targets rebels in Iraq, inflicting "heavy losses"
16 Dec - Turkish jets bomb PKK targets in Iraq for the first time
The declaration came after a spokesman for the Iraqi Kurdish peshmerga security forces told the BBC that some 300 lightly armed Turkish troops crossed the border into northern Iraq.
The spokesman said the soldiers moved up to 3km (1.9 miles) inside Iraq in an area called Seeda Kan - in the triangle between Iraq, Iran and Turkey.
Later, Fouad Hussein, chief of staff of President Barzani, said the troops withdrew less than 24 hours after the incursion.
"The Turkish force that entered is no longer there," Mr Hussein told Reuters.
The incursion was believed to be the first major Turkish troop deployment in Iraq since Turkey's parliament voted in October to allow the military to launch cross-border operations to combat the PKK.
Ankara accuses the PKK of using bases inside Iraq to launch attacks on Turkey.
Turkey has massed up to 100,000 troops near the mountainous border with northern Iraq, backed by tanks, artillery and warplanes.
As many as 3,000 PKK members are believed to be based inside northern Iraq. Turkey has accused the local Kurdish authorities of supporting them.