Supplies including drinking water and tents are due to be dropped from C130 aircraft over the weekend to help members of the Yazidi religious minority trapped on a mountainside.
Foreign Secretary Philip Hammond is expected to chair a meeting of the Government's Cobra committee this afternoon to assess the crisis.
The US has begun airstrikes against IS targets engaging Kurdish forces near the key city of Irbil, but Britain has ruled out military action at this stage.
Instead, David Cameron has signalled the UK will focus on delivering humanitarian aid.
Thousands of Yazidis have been driven into the barren Sinjar mountains, and hundreds of women seized by militants.
The UK's £8 million emergency package includes reusable filtration containers, tents and solar lights which can also recharge mobile phones.
Some £3m will go to charities and NGOs already on the ground and helping displaced people in northern Iraq, along with £2.5m to the International Committee of the Red Cross.
A further £500,000 will be used to ensure Kurdish and UN systems can co-ordinate properly.
FOREIGN: PAGE 38