RAAF planes will join an international humanitarian mission within days to aid trapped Iraqis, and Australian forces taking part in military action against Islamic jihadists remains a live option.
Defence Minister David Johnston said yesterday Australia was ready to help "in any way we can" if asked by the US or Iraqi governments after American air strikes on the Islamic State militants who are on a bloody rampage and have declared a caliphate.
The minister said right-minded countries could not sit and "watch atrocities unfold on the nightly television without taking action".
"With respect to muscling up, we don't telegraph our punches in any shape or form and there's been no request for us to participate in combat," he said.
"What the future holds in what is clearly a very troubled, confused and difficult situation in Iraq anybody can guess."
Australia's possible involvement will be part of talks between Senator Johnston and Foreign Minister Julie Bishop in Sydney today with US counterparts Chuck Hagel and John Kerry.
The Prime Minister has offered an Australian C-130 Hercules based in the Middle East to respond to what he called a "potential humanitarian catastrophe".
Tony Abbott said the rise of Islamic State posed an extraordinary problem, not just for the Middle East but the world.
"Islamic State, as they're now calling themselves, is not just a terrorist group, it's a terrorist army and they're seeking not just a terrorist enclave but effectively a terrorist state, a terrorist nation," he said.
Senator Johnston said Australian forces had honed air-drop skills in the mountains of East Timor and could make a "considerable contribution" to potentially 30,000 Iraqis needing help.
Mr Hagel welcomed the offer of an Australian relief effort.
"We are working through specific areas of where the Australians can help," he said. France and Britain would also assist.
"This is a humanitarian issue of great consequence for all of the world and I think great powers understand they have responsibilities in these areas," he said
Opposition Leader Bill Shorten said Labor was fully behind the humanitarian mission but there had been no discussion about committing troops.
"The Government has not spoken to Labor about that at all," Mr Shorten said.
US planes did a fourth air drop of food and water to civilians besieged by the jihadists on Mt Sinjar in northern Iraq.
A C-17 and three C-130 cargo plane dropped 88 bundles of food and water to thousands of Iraqi citizens trapped on the mountain, the US Central Command, which covers the Middle East, said.
The bundles included thousands of litres of drinking water and 22,488 meals ready to eat.
The Pentagon said the US had delivered more than 74,000 meals and more than 56,000 litres of fresh water to displaced civilians from the Yazidi religious minority, who are cornered on the mountain by Islamic State.
The US on Friday began air strikes aimed at halting the advance of the Sunni IS militants.
President Barack Obama said on Thursday he was sending warplanes back over Iraq for the first time since US troops left in 2011.
This came after spectacular gains by the jihadists, who seized the country's biggest dam and advanced within striking distance of the Kurdish capital. Mr Obama justified the return to Iraq by saying the Yazidi were at risk of genocide.