A defiant Prime Minister Nouri al-Maliki rejected calls Wednesday for an interim "national salvation government" intended to undermine the Sunni insurgency by presenting a unified front among Iraq's three main groups, calling it a "coup against the constitution."

Al-Maliki's televised address to the nation was his first public statement since President Barack Obama challenged him last week to create a more inclusive government or risk his country descending into sectarian civil war.

U.S. officials believe the leadership in Baghdad should seek to draw Sunni support away from the militants led by an al-Qaeda breakaway group, the Islamic State of Iraq and Syria, which has seized a chunk of northwestern Iraq and seeks to carve out a purist Islamic enclave across both sides of the country's border with Syria. The insurgency has drawn support from disaffected Iraqi Sunnis who are angry over perceived mistreatment and random detentions by the Shia-led government.

The crisis has drawn the U.S. back to Iraq, although on a much smaller scale, nearly three years after the Americans withdrew from the country. Dozens of newly arrived U.S. military advisers and special operations forces began assessing the Iraqi forces in an effort to strengthen Baghdad's ability to confront the insurgency.

In the face of militant advances that have virtually erased Iraq's western border with Syria and captured territory on the frontier with Jordan, al-Maliki's focus has been the defence of Baghdad, a majority Shia city of seven million fraught with growing tension. The city's Shias fear they could be massacred and the revered al-Kazimiyah shrine destroyed if Islamic State fighters capture Baghdad. Sunni residents also fear the extremists, as well as Shia militiamen in the city, who they worry could turn against them.

Militants vow march on Baghdad

The militants have vowed to march to Baghdad and the holy Shia cities of Najaf and Karbala, a threat that prompted the nation's top Shia cleric, Grand Ayatollah Ali al-Sistani, to issue an urgent call to arms that has resonated with young Shia men.

Several politicians, including Ayad Allawi, a secular Shia who has been named as a possible contender to replace al-Maliki, have called on him to step down and form an interim government that could provide leadership until a more permanent solution can be found.

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Iraqi security forces managed to resist a pre-dawn raid launched by ISIS fighters intended to seize a key oil refinery in the country's north, the government said Wednesday. (Ahmed Saad/Reuters)

Al-Maliki, however, insisted the political process must be allowed to proceed following recent national elections in which his bloc won the largest share of parliament seats.

"The call to form a national salvation government represents a coup against the constitution and the political process," he said. He added that "rebels against the constitution" — a thinly veiled reference to Sunni rivals — posed a more serious danger to Iraq than the militants.

He called on "political forces" to close ranks in the face of the growing threat by insurgents, but took no concrete steps to meet U.S. demands for greater inclusion of minority Sunnis.

"We desperately need to take a comprehensive national stand to defeat terrorism, which is seeking to destroy our gains of democracy and freedom, set our differences aside and join efforts," said al-Maliki. "The danger facing Iraq requires all political groups to reconcile on the basis and principles of our constitutional democracy."

"We, despite the cruelty of the battle against terrorism, will remain loyal and faithful to the will and choices of the Iraqi people in bolstering their democratic experiment," he said.

Al-Maliki's coalition, the State of the Law, won the 92 seats of the 328-member parliament in the election. In office since 2006, al-Maliki needs the support of a simple majority to hold on to the job for another four-year term. The legislature is expected to meet before the end of the month, when it will elect a speaker. It has 30 days to elect a new president, who in turn will select the leader of the majority bloc in parliament to form the next government.

Militants launch dawn raid on oil refinery

In fighting Wednesday, Sunni militants launched a dawn raid on a key Iraqi oil refinery they have been trying to take for days, but security forces fought them back, said Col. Ali al-Quraishi, the commander of the Iraqi forces on the scene.

A mortar shell also smashed into a house in Jalula, northeast of Baghdad, killing a woman and her two children. That town in the turbulent Diyala province is under the control of Kurdish fighters known as peshmerga.

Also Wednesday, a report by Iran's semi-official Fars news agency said an attack near Iran's western border with Iraq has killed three Iranian border guards. They were killed Tuesday night while patrolling along the border in western Kermanshah province. A border outpost commander was among the three killed, Fars quoted a local security official, Shahriar Heidari, as saying.

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ISIS fighters have tried to capture the oil refinery in Beiji, north of Baghdad, for over a week. The refinery provides Iraq with ten per cent of its electrical power, analysts say. (Reuters)

Heidari said an unspecified "terrorist group" was behind the attack but provided no details.

Al-Maliki, who has no military background but gets the final say on major battlefield decisions, has looked to hundreds of thousands of Shia volunteers who joined the security forces as the best hope to repel the Islamic State's offensive.

While giving the conflict a sectarian slant — the overwhelming majority are Shias — the volunteers have also been a logistical headache as the army tries to clothe, feed and arm them. Furthermore, their inexperience means they will not be combat-ready for weeks, even months.

Still, some were sent straight to battle, with disastrous consequences.

New details about the fight for Tal Afar — the first attempt to retake a major city from the insurgents — underscore the challenges facing the Iraqi security forces.

Dozens of young volunteers disembarked last week at an airstrip near the isolated northern city and headed straight to battle, led by an army unit. The volunteers and the accompanying troops initially staved off advances by the militants, but were soon beaten back, according to military officials.

They took refuge in the airstrip, but the militants shelled the facility so heavily the army unit pulled out, leaving 150 panicking volunteers to fend for themselves, said the officials, who spoke on condition of anonymity because they were not authorized to speak to the media.

The ill-fated expedition — at least 30 volunteers and troops were killed and the rest of the recruits remain stranded at the airstrip — does not bode well for al-Maliki's declared plan to make them the backbone of Iraq's future army.