Yesterday a meeting of the UK Government's emergency committee decided to use Tornado jets in the region to aid the humanitarian relief effort.
Iraq's president asked the deputy speaker Haider al-Abadi, previously a nominee for prime minister by Shia parties in place of the current PM Nouri Maliki, to form a new government
Meanwhile thousands of people were still trapped on Mount Sinjar having fled from advancing Islamic State militants.
Overnight on Sunday the UK was forced to abort a bid to deliver aid to those on the mountain.
The mission was called off after large numbers of people gathered on the ground below the aircraft, meaning the RAF aircrew could not guarantee their safety.
Yesterday, Number 10 said Tornado aircraft would now be "pre-positioned" in the region, carrying out surveillance to help with the aid effort.
Downing Street also indicated that the UK may be willing to follow the example of the US and arm Kurdish forces.
The Prime Minister's official spokeswoman said: "Our focus is on the humanitarian effort. We do think it is important that the Iraqi forces, including the Kurdish forces, are able to respond to Isil [Islamic State] and to tackle this crisis. We will look at what options there are that might enable them to do that.
"But there have not been discussions, substantive discussions, of that yet."
Despite the stepping-up of the UK's role Downing Street was adamant the Prime Minister would not be returning early.
Mr Cameron was engaged with the situation despite being overseas, and a recall of Parliament was not on the cards, No 10 said.
Conservative backbenchers have stepped up calls for the UK to intervene in Iraq and for a recall of parliament. Tory MP Conor Burns backed calls for UK ministers to arm the Kurdish forces.
He said: "We should be supporting the United States in airstrikes to stop the progress of these people. We should be responding urgently and positively to the request from the Kurdish regional government for armaments.
"They are not asking us to send our boys and girls in to fight a war. They are asking us to give them the opportunity to fight their war against these terrible people."
Mr Burns warned the Islamic State could be a threat to the UK.
He said: "This group has got to be stopped and let's be very clear about this - if this group calling itself the Islamic State, if it ends up with a serious amount of territory and resource in Iraq it will pose a desperate, destabilising threat to the region but ultimately to the United Kingdom and the West."
He added: "I think it would be inexcusable if Parliament and the United Kingdom did not come out of recess to debate what the United Kingdom's response would be to a problem which in part we created."
A former chief of the Army, Lord Dannatt, also called on the UK to consider military intervention, alongside American forces.
Foreign Secretary Philip Hammond, who chaired the Government's emergency Cobra committee meeting, warned of a "potential humanitarian disaster on a huge scale".
However, he rejected demands for parliament to be recalled adding: "We don't envisage a combat role at the present time."
Mr Maliki, who wants a third term in power, said Mr Abadi's nomination was a "violation of the constitution".
l Generous Scots donated £434,000 to the Disasters Emergency Committee Gaza Crisis Appeal in the first three days since it was launched. The appeal total has now reached £6 million.