The UK will "consider positively" any request for military equipment from Kurdish fighters in Iraq, according to a Government source.
David Cameron and Deputy Prime Minister Nick Clegg agreed during an emergency Cobra meeting that it was "vital" to help the fight against Islamic State (IS) militants, formerly known as the Islamic State In Iraq and Syria (ISIS).
The Government is now expected to provide weapons and equipment, should Kurdish leaders make a request.
Iraqi and Kurdish forces are battling IS, which has recently made significant gains in the north of the country, causing thousands to flee after they were issued with an ultimatum to convert to Islam or face death.
A Downing Street source said any supplies would be "dependent on what the Kurds would need".
France is already sending weapons to Iraq, with President Francois Hollande confirming the "imminent delivery of military equipment".
Germany, the Czech Republic and the Netherlands have also said they will send arms or are considering doing so.
Meanwhile, several thousand refugees from the Yazidi minority remain on Mount Sinjar in searing temperatures - but the US has said it is now unlikely to mount a rescue.
President Barack Obama said the situation had "greatly improved" after a special forces mission found many people had escaped.
Mr Obama said airdrops had delivered more than 114,000 meals and tens of thousands of gallons of water, with fighter jets striking Islamic State fighters to allow the drops to take place.
The militants' siege of Sinjar town had been broken, the president said, but strikes would continue.
UK International Development Secretary Justine Greening said military action and resistance from Kurdish troops had cleared a safe path for many refugees, who originally were thought to number in the tens of thousands.