More graphic footage has emerged, purporting to show Iraqi prisoners being interrogated before one is shot dead, as Nick Childs reports.
Sunni militants have seized the northern Iraqi city of Tal Afar, officials and residents say.
Militants led by ISIS - the Islamic State in Iraq and the Levant - captured key cities including Mosul and Tikrit last week, but some towns were retaken.
UN Humanitarian Chief Valerie Amos said there were reports of "major human rights violations", including summary executions of civilians.
The US says it may use drone strikes to halt the militants' advance.
"They're not the whole answer, but they may well be one of the options that are important," said US Secretary of State John Kerry.
The Pentagon said US officials were also open to holding direct talks with Iran over Iraq, but there was "no plan to co-ordinate military activity" between the two countries.
Iranian President Hassan Rouhani earlier said he would consider co-operation if the US took action.
The USS George HW Bush aircraft carrier has already been deployed to the Gulf, accompanied by two more warships. But Washington says no US troops will be deployed on the ground.
Britain reiterated on Monday that it had no plans for military intervention in Iraq.
Iran said it was ready to assist Iraq in its battle against ISIS insurgents, seen here in Nineveh province
Diplomatic contacts on regional security between the US and Iran are unusual, but not unprecedented. There were significant contacts between them in the wake of the 9/11 attacks. Iran was strongly opposed to the Taliban and their jihadist allies in al-Qaeda. So what might the two countries talk about now?
Iraq's Prime Minister Nouri Maliki is a close ally of Iran. Objectively, however much it is frustrated with Mr Maliki's Shia sectarianism, keeping him in power may be seen in Washington as the best of a bad set of options. One hope may be that Tehran might be persuaded to bring some leverage to bear to encourage Mr Maliki to be more inclusive in his politics.
But the balance now between Washington and Tehran has changed dramatically since Saddam Hussein's overthrow when the US was in the ascendant. Now it is probably Tehran that holds more of the cards.
Fighting in Tal Afar began on Sunday, with mortar shelling of some districts as militants tried to enter the city in Nineveh province.
Tal Afar, which has a mixed Sunni and Shia population, lies between Mosul and the Syrian border.
The city of 200,000 people was taken just before dawn on Monday, Mayor Abdulal Abdoul told the Associated Press news agency.
Eyewitnesses said militants in pick-up trucks mounted with machine guns and flying black jihadi banners were roaming the streets as gunfire rang out.
Security has been increased in Baghdad after ISIS threatened to march on the capital
Hundreds of Iraqi volunteers have signed up for military service in recent days
Tribal fighters, like these in Diyala province, have also joined Iraqi forces in the battle against the militants
Fighters said to be from ISIS are seen in Salahuddin province where they allegedly massacred Iraqi soldiers
But the government insists it still largely controls the town and that ISIS fighters would be swiftly dealt with, says the BBC's Jim Muir in northern Iraq.
The government also announced it had "regained the initiative" against an offensive by Sunni rebels.
The defence ministry released footage on Monday which it said was of air strikes on ISIS targets north of Baghdad, including Mosul and Samarra provinces.
Footage released by the Iraqi Ministry of Defence is said to show strikes on ISIS targets north of Baghdad on Sunday
Earlier, Iraqi army spokesman Lt Gen Qasim Ata said the military had scored successes against the militants in several areas, killing 279 of them. The figure could not be independently verified.
Government forces were also reported to be building up in the city of Samarra, north of Baghdad, ready for a counter-offensive on Tikrit.
- The Islamic State in Iraq and the Levant (ISIS) has 3,000 to 5,000 fighters, and grew out of an al-Qaeda-linked organisation in Iraq
- Joined in its offensives by other Sunni militant groups, including Saddam-era officers and soldiers, and disaffected Sunni tribal fighters
- ISIS has exploited the standoff between the Iraqi government and the minority Sunni Arab community, which complains that Shia Prime Minister Nouri Maliki is monopolising power
- The organisation is led by Abu Bakr al-Baghdadi, an obscure figure regarded as a battlefield commander and tactician
The pictures have not been independently verified, but military sources said they were authentic
Meanwhile, Baroness Amos said the UN was looking into the authenticity of photos posted online by Sunni militants that appear to show fighters massacring Iraqi soldiers.
"Because of the ongoing fighting it has made it difficult for us to get around and know exactly what is going on," she said at a press briefing in Geneva.
In the scenes, the soldiers are seen being led away and lying in trenches before and after their "execution" in Salahuddin province.
The images appear to show captured Iraqi soldiers in civilian clothes being led away by militants, as the BBC's John Simpson reports
Footage has also emerged purporting to show ISIS fighters taunting captured troops with threats of decapitation.
The Iraqi military earlier said the pictures were real, but their authenticity has not been independently confirmed.
The US condemned them as "horrifying".
If the photographs are genuine, this would be by far the biggest single atrocity since the time of the American-led invasion of Iraq in 2003.
The US has begun evacuating some diplomatic staff from Baghdad, moving them to Kurdish-controlled territory in the north-east and to Basra in the south.
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