Isis fighters are reportedly just one mile away from Baghdad as reports emerge of al-Qaeda militants bolstering their ranks in Syria.
According to the Foundation for Relief and Reconciliation in the Middle East, Isis was approaching the Iraqi capital on Monday morning.
"The Islamic State are now less than 2km away from entering Baghdad," a spokesperson said.
"They said it could never happen and now it almost has. Obama says he overestimated what the Iraqi Army could do. Well you only need to be here a very short while to know they can do very very little."
Isis fighters were also battling Government forces in a key town 25 miles west of Baghdad - Amiriyat al-Fallujah.
According to a BBC correspondent, fighting had calmed by Monday afternoon but a standoff continued along the main road to nearby Fallujah, which is under Isis control.
The extremists had been advancing towards the capital but were held off by bombing and Iraqi ground forces.
US air strikes overnight targeted other Isis positions in Anbar province, the Pentagon said, and in Syria four more oil fields controlled by militants near Raqqa were hit on Sunday.
American officials called the attacks “successful” but the UK-based Syrian Observatory for Human Rights claimed mostly civilians were hit and a grain silo was destroyed.
The news comes amid reports of an emerging alliance between Isis forces in Syria and Jabhat al-Nusra, also known as the Nusra Front.
The group is the Syrian offshoot of al-Qaeda and has been fighting against the Assad regime in the civil war.
Despite months of clashes between its forces and Isis (also known as Islamic State) militants, the two groups appear to be forming a loose coalition in parts of the country to fight increasing attacks by the US and its allies.
Al-Nusra’s official spokesperson, Abu Firas al-Suri, threatened the coalition nations with retaliation on Saturday.
“These states have committed a horrible act that is going to put them on the list of jihadist targets throughout the world,” he said.
“This is not a war against al-Nusra, but a war against Islam.”
Al-Nusra and Isis leaders are now holding war planning meetings together, a source told the Guardian, although no formal alliance has been confirmed.
The reports follow growing defections from other Islamist groups to Isis, which is seen as better organised and equipped to create an “Islamic State” straddling Iraq and Syria.
A loyalty pledge was reportedly made by al-Nusra in June in the town of Al-Bukamal near the Iraqi border, the Syrian Observatory for Human Rights said, and the two groups have fought together against Government forces.
The report appeared to be confirmed on Twitter by a photograph showing an Egyptian al-Nusra Front commander shaking hands with an Isis leader of Chechen origin.
Although both Isis and al-Nusra are rooted in al-Qaeda, the two have been rivals since Isis started its involvement in Syria’s civil war in spring last year and have engaged in bloody battles killing more than 3,000 militants from both sides.
A merger had been declared by Isis leader Abu Bakr al-Baghdadi in 2013, when Isis was known as al-Qaeda in Iraq (AQI), but the alliance was rejected by al-Nusra and overruled by al-Qaeda leader al-Zawahiri.
But the international response to Isis’ bloody rampage through Iraq and Syria, and the beheadings of British and American hostages, is pushing the groups towards an alliance.
An al-Nusra source told Reuters: “There are hardline voices inside Nusra who are pushing for reconciliation with Islamic State.”
A formal alliance is believed to only be possible on the orders of al-Qaeda leader Ayman al-Zawahiri.
A deal between the militant groups would strengthen the Islamist force in Syria as air strikes cripple Isis funding sources, equipment stores and slow its advances.
The US has not said al-Nusra is being targeted but its planes have attacked a new group called Khorasan, which some analysts suspect is part of al-Nusra.
The two groups have been known to co-operate and Khorasan is believed to be made up of veteran al-Qaeda fighters with battlefield experience mostly in Pakistan and Afghanistan.
Britain, the US and the United Nations are among those who have classed al-Nusra as a terrorist group, citing its use of suicide bombing, terrorist attacks and attempts to impose Islamic law.
A small number of anti-Government groups, including some members for the secular Free Syrian Army, opposed the label after al-Nusra gained respect fighting the Assad regime.