Kurdish Peshmerga fighters say Iraq’s central government has ordered them to surrender key military positions in the disputed city of Kirkuk within hours.
They were given a deadline of 02:00 on Sunday (23:00 GMT on Saturday) to quit military facilities and oil fields.
Brief clashes also erupted between Kurdish forces and Shia militia backing the Iraqi government.
Tensions have been on the rise since Kurds held a referendum on independence last month, which Iraq called illegal.
The oil-rich province of Kirkuk is claimed by both the Kurds and Baghdad, though the two sides were recently united in the fight against the Islamic State (IS) jihadist group.
Kurdish Peshmerga forces took control of much of the province in 2014, when IS militants swept across northern Iraq and the army collapsed.
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The Iraqi parliament asked Prime Minster Haider al-Abadi to send troops to Kirkuk and other disputed areas after the official referendum results – which overwhelmingly backed independence – were proclaimed.
The referendum was held in three autonomous provinces of Iraqi Kurdistan, but also in nearby Kurdish-held areas including Kirkuk.
The province, which bears the same name as the city, is thought to have a Kurdish majority, but Kirkuk has large Arab and Turkmen populations.
On Saturday, there was a brief outbreak of fighting near Kirkuk, with each side blaming the other, reports the BBC’s Orla Guerin in Iraq.
Mr Abadi said last week he would accept disputed areas being governed by a “joint administration” and that he did not want an armed confrontation.
On Thursday, the prime minister and the Iraqi military reiterated that they had no plans for a military operation in Kirkuk and were focused on recapturing the last IS foothold in Iraq near the border with Syria.
But since then there has been a major build up of Iraqi forces around the city and Kurdish officials say the Peshmerga have been ordered to defend their positions “at any cost”.