The Sunni militant group Isis has abducted nearly 100 children from the Shiite and Yezidi communities and are holding them hostage near their stronghold of Mosul.
According to local reports, the militants kidnapped the children shortly after they seized the cities in Talafar and Shingal during their earlier advances.
The children are being kept in an orphanage, sources told the Kurdish news outlet Rudaw.
There are believed to be more than 45 Yezidi and 50 Shiite children among the hostages.
"The place is being closely guarded by six Isis militants," said a source, who did not wish to be identified fearing reprisal attacks.
The orphanage is said to be one of the biggest facilities in the area and several children were sheltered in it earlier, before it was taken over by the Sunni insurgents.
The development comes at a time when reports are emerging that the dreaded extremists are conducting training camps for children on beheading.
The children are said to be given large knives and dolls resembling westerners to perform mock beheadings.
Residents and parents in Iraqi cities, recently captured by the Isis, such as Raqqa have corroborated the developments saying the children are being forced to get into the fold of the Islamists.
An affected father was quoted as saying: "Nowadays, it's the children in Raqqa who come out to see the executions and crucifixions carried out by the Isis."
A mother said: "The regime hasn't spared its arms, using everything they have against us. Then Isis tries to teach our children that they should consider us infidels and cut off our heads."