The countries have summoned each other's ambassadors after the Iraqi Parliament passed a resolution accusing Turkish troops training anti-DAESH fighters near Mosul of being "occupation forces."
Turkey has condemned the Iraqi parliament's resolution to call on the country's government to define Turkish troops in the town of Bashiqa, near Mosul, as "occupation forces," with Prime Minister Haider al Abadi adding his voice to those calling for Turkey to pull them out.
Turkish troops have been stationed in northern Iraqi town for the purpose of training Iraqi Kurdish Peshmerga fighters to take on the DAESH terrorist organisation for a year, having been invited by the Kurdish Regional Government. But Iraq's central government in Baghdad sees the deployment as a violation of its sovereignty.
Relations between Turkey and Iraq were strained on Wednesday after both countries summoned each other's ambassadors following the Iraqi parliament's decision, which came a week after the Turkish parliament voted to extend a 2007 mandate allowing Turkish forces to operate in Syria and Iraq to combat terror threats.
But after the Iraqi parliament's vote, Prime Minister Abadi warned Turkey "not to intervene in Iraqi matters," adding that he fears "the Turkish adventure could turn into a regional war."
"The Turkish leadership's behaviour is not acceptable and we don't want to get into a military confrontation with Turkey," Abadi said.
In response, Turkish Foreign Minister Mevlut Cavusoglu said the Iraqi move was "not well-intentioned" and played down claims that the deployment posed a threat to Turkey's southeastern neighbour, instead saying that Turkey seeks a "strong and stable" Iraq.
"We give importance to Iraq's unity and independence," Cavusoglu said. "The sole aim of these camps is to train local forces to take back territory lost to DAESH."
On Tuesday the Turkish Foreign Ministry released a statement condemning the Iraqi Parliament's resolution. "We believe this decision does not reflect the views of the majority of Iraqi people, whom Turkey has stood by for years and attempted to support with all its resources," the statement said.
The latest falling out recalls a similar controversy last year, in which the Iraqi government demanded Turkey withdraw its forces from Bashiqa. In response Turkey moved some troops elsewhere in Iraq in an attempt to ease concerns, but maintained a presence at the camp.
Turkey argues that the mandate is not anything new, pointing out that the deployment previously had Baghdad's support. "Bashiqa camp was set up within knowledge of Iraqi administration," Cavusoglu told a news conference. "Baghdad officials visited this camp and have even given financial support to it in the past," he said.
More than 750 DAESH terrorists have been killed from Bashiqa camp, Cavusoglu added.
Ankara deems the deployment necessary to protect its national security due to the failure of the Iraqi government to maintain control of large swaths of territory lost to DAESH, in part due to sectarian policies which have worsened tensions between Iraq's Shia majority and the country's Kurdish and Sunni minorities.
These two groups form a majority of the population in and around Mosul in Iraq's north, and the Turkish government believes the Sunni and allied Kurdish Peshmerga forces will need to play a major role in order for the city to be successfully retaken from DAESH.