Britain will "consider favourably" any request for arming Iraqi Kurds in their battle against the Islamic extremists, foreign secretary Philip Hammond said on Friday.
Hammond is attending the EU foreign ministers meet in Brussels where the issue is being discussed.
"The UK has said we will also consider favourably any requests for supplies of arms. We are already shipping ammunition and supplies from other eastern European countries into Irbil," he said on the sidelines of the meeting.
Kurdish forces are fighting militant group Islamic State (IS), which has seized large parts of northern Iraq. France and the US have already supplied them arms.
Hammond said that though UK has not been formally asked for direct help, any request from the Kurds would be sympathetically considered.
He termed the EU meeting as an "opportunity for member states to get together, to compare notes, to coordinate our activity, and send a very clear signal of our support to the new prime minister designate".
Hammond added that the meeting was a chance to send "a very clear signal that Iraq now needs to have an inclusive government representing all the people of Iraq so that we can get behind it and push back this terrible threat from IS".
A Downing Street spokesperson said: "It is vital that Iraqi and Kurdish forces are able to stop the advance of IS [Islamic State] terrorists... That is why we continue to encourage Dr al-Abadi to establish an inclusive government, and we welcome the fact that the Islamic Dawa party have offered him their support."
"The Times" newspaper quoted a government source as saying that a decision to arm the Kurds had been taken at a high-level Cobra security meeting attended by Prime Minister David Cameron yesterday night.
Initially Britain could supply high-tech equipment, such as night-vision goggles, but could also provide ammunition and weaponry if asked, it said.
The Kurds have trained on Soviet-era equipment, which is why arms were sought from Eastern Europe in the first instance.
The plan comes after a rescue mission for Yazidi refugees trapped by the militants in the Sinjar mountains was abandoned as most of them had left the spot on their own.