Clashes between Iraqi security forces and Sunni Islamists of the Islamic State of Iraq and al-Shams (Isis) have erupted at the northern entrance of the town of Samarra, according to reports.
The development came after Isis militants overran parts of Tikrit as an extremist insurgency continues to rock Iraqi Prime Minister Nouri al-Maliki's administration.
Samarra, 125 km (78 miles) of Baghdad, is home to Shias holy sites, including the tombs of several Shia imams (the Holy Shrines). It stands on the east bank of the Tigris, south of Tikrit and Mosul, both of which have been captured by Isis.
Isis is an al-Qaida offshoot who wish to create a state across the Syrian-Iraqi border.
The militants have begun to move south from Mosul to the oil town of Baiji, the home of Iraq's largest oil refinery, before entering Saddam Hussein's hometown.
"We are coming to die or control Baiji, so we advise you to ask your sons in the police and army to lay down their weapons," the militants allegedly told local tribal leaders in Baiji.
If the militants continue south, the next major town is the Iraqi capital of Baghdad.
Last week, security officers repelled a large attack by militants in Samarra. Gunmen had seized control of the municipality building and university, before being fought back by Iraqi forces. They had also occupied Samarra's two largest mosques and announced the "liberation" of the city.
The Islamist militants took control of Mosul after hundreds of its fighters overwhelmed government military forces in a lightening attack on Monday, forcing up to 500,000 people to flee the city and Iraqi prime minister Nouri al-Maliki to call a national state of emergency.
They also seized considerable amounts of US-supplied military hardware. Photos have already emerged of Isis parading captured Humvees in neighbouring Syria where they are also waging war against President Bashar al-Assad's regime.