US warplanes bombed jihadist positions in northern Iraq on Friday, in what the federal and Kurdish governments vowed would allow them to start clawing back areas lost in two months of conflict.

President Barack Obama's order for the first air strikes on Iraq since he put an end to US occupation in 2011 came after Islamic State (IS) militants made massive gains on the ground, seizing a dam and forcing a mass exodus of religious minorities.

The Pentagon said US forces bombed an artillery position after fire against Kurdish regional government forces defending their capital Arbil.

In a second wave hours later, a drone destroyed a mortar position and jets hit a seven-vehicle IS convoy with eight laser-guided bombs.

The US operation began with air drops of food and water for thousands of people hiding from the Sunni extremist militants in a barren northern mountain range.

Many people who have been cowering in the Sinjar mountains for five days in searing heat and with no supplies are Yazidis, a minority that follows a 4,000-year-old faith.

Late Friday the Pentagon said that cargo planes escorted by combat jets made a second air drop of food and water to "thousands of Iraqi citizens" threatened by the jihadists "on Mount Sinjar, Iraq."

Obama accused the IS, which calls Yazidis "devil-worshippers", of attempting "the systematic destruction of the entire people, which would constitute genocide".

The UN said it was "urgently preparing a humanitarian corridor".

Panic had begun to grip Arbil after IS thrust into the Nineveh plains separating it from the jihadist-held city of Mosul and Obama's decision was welcomed there.

"We were very nervous these past few days. Daash (Islamic State) is powerful and well-equipped," said Karwan Ahmed, 27, a taxi driver. "This is good news."

- Coordinated fightback -

The Kurdish peshmerga, short of ammunition and stretched thin along a huge front, have been forced to retreat in the face of brazen assaults by the jihadists.

Their withdrawal from the Christian heartland on Wednesday and Thursday sparked a mass exodus -- 100,000 people according to Iraq's Chaldean patriarch -- and spurred Western powers into action.

Obama suggested the strikes would be "limited" in scope. But he "has not laid a specific end date," White House spokesman Josh Earnest told reporters, while insisting a "prolonged military conflict that includes US involvement is not on the table."

Iraq's military chief of staff told AFP he expected to see his forces and the peshmerga reclaim large tracts of land "in the coming hours".

He said he thought the US air strikes would extend to other towns controlled by IS, but he did not say which ones. The jihadists control towns west, south and north of Baghdad.

The Kurdish presidency's chief of staff, Fuad Hussein, said at a news conference in Arbil late Friday that 150 peshmerga had been killed in two months of fighting a long a front stretching more than 1,000 kilometres.

He said the US strikes would allow routed Kurdish forces to retake the initiative and carry out a three-phase plan: regroup, redeploy in lost areas and assist the return of displaced populations.

Obama's announcement came after an emergency UN Security Council meeting called by France, which also offered to support the emergency effort.

- Captured dam -

The capture of Mosul dam, which according to a Kurdish official happened on Thursday, was another setback for the peshmerga who had been defending it and gave jihadists a power of life and death over a huge region.

While IS has weaponised dams before, Mosul dam provides water and electricity to its main stronghold and is crucial to its own state-building efforts.

A 2007 letter to the Iraqi government based on a US assessment had warned that "catastrophic failure of Mosul dam would result in flooding along the Tigris river all the way to Baghdad."

There has been daily fighting on several fronts for two months, and, as the conflict escalated Friday, the US banned its civilian airliners from overflying Iraq, while Britain asked its nationals in parts of Kurdistan to leave.

The Federal Aviation Administration (FAA) decision to bar US planes from Iraqi airspace was mirrored by British Airways and Lufthansa. Several European carriers had quietly stopped flights over Iraq weeks ago.

Obama came to office determined to end US military involvement in Iraq, and in his first term oversaw the withdrawal of the huge ground force deployed there since the 2003 American-led invasion.

But the capture of huge swathes of land by jihadists, who in late June proclaimed a "caliphate" straddling Syria and Iraq, has brought a country already rife with sectarian tension closer to collapse.

IS has enjoyed a spectacular run of military successes in Iraq, but the group also scored a key victory in Syria, with the capture overnight of a key army base in Raqa province.

Observers say one of the main obstacles to coordinated action by all of IS's Iraqi foes is Prime Minister Nuri al-Maliki, accused by many of having institutionalised sectarianism in recent years.