The use of Shi'ite militias to try to take back the Iraqi city of Ramadi from Islamic State risks unleashing more sectarian bloodletting, current and former US officials have said, but Washington and Baghdad appear to have few other options.

The prospect of Iranian-backed militias leading efforts to retake Ramadi underlines Washington's dwindling options to defeat Islamic State in Iraq, with Prime Minister Haider al-Abadi's grip on power weak, a national army still in its infancy and Tehran increasingly assertive.

Islamic State's capture of Ramadi, despite months of US-led air strikes and military advice, marked a fresh low for the shattered Iraqi army, which beat a chaotic retreat from the city over the weekend.

Abadi immediately turned to the Shi'ite militia groups, backed by Iran, which together have become the most powerful military force in Iraq since the national army first collapsed last June in the face of sweeping Islamic State gains.

A column of 3,000 Shi'ite militia fighters arrived on Monday at a military base near Ramadi, the capital of Sunni-majority Anbar province that has long been a centre of opposition to Iraq's Shi'ite-led government.

One US official, speaking on condition of anonymity, described Ramadi as "a powder keg" and said any use of militia has "got to be dealt with very, very delicately".

"There's the potential it can go very, very badly," the official said, without predicting such an outcome.

US officials said Washington was deeply divided about the involvement of Shi'ite militias with links to Iran, a US rival that has been expanding its influence throughout the Middle East. After spearheading the recapture of Tikrit, some Shi'ite fighters last month went on a spree of burning, looting, and violence in the Sunni Iraqi city, according to local residents.

"There are people in our government who see any involvement of Iran as anathema. There are others who say the Shi'ite involvement will promote sectarian violence. There are others who say that's not true," a second US official said on condition of anonymity.

One US intelligence official said one concern was that Islamic State could use the involvement of Shi'te militias to itself stir up sectarian hatred.

RISK OF ALIENATING SUNNIS

But the reality, analysts said, is that Iraq's government does not appear to have enough Sunni forces at its disposal to make an assault on Ramadi.

US President Barack Obama reluctantly started bombing Islamic State targets last year after it seized swathes of Iraq but he has made clear his desire not to let US troops get sucked back into a conflict he vowed to end when he first ran for president.

The loss of Ramadi comes a month after Obama gave Abadi a warm welcome in Washington, backing the Shi'ite politician to bridge Iraq's sectarian divide and forge a strong national army to take the fight to Islamic State.

"We never tried to stop it," the second official said of Abadi's recourse to Shi'ite militias. "You got to fight with the army you got, and this is the army they got."

Another official said the United States could support "all elements" of forces aligned against Islamic State, including the Shi'ite militias that are nominally under Baghdad government control.

"But, as we have said, there must be clear (Iraqi security force) command and control, sound planning, and coordination wherever possible with local leaders," the official added.

To be sure, atrocities by Shi'ite militias could force the United States to rethink its support.

Republican senators John McCain and Lindsey Graham, among the most outspoken critics of Obama's foreign policy, called the fall of Ramadi "a sad reminder of this administration's indecisive air campaign" and a broader lack of strategy.

They also expressed concern about Iranian-backed Shi'ite militias launching an offensive.

"Whatever operational success (Shi'ite) militias may have in Anbar would be far exceeded by the strategic damage caused by their violent sectarianism and the fear and suspicion it breeds among Iraqi Sunnis," they said.

"With neither the United States nor Gulf Arab states willing to deploy their ground troops and the Iraqi armed forces in disarray, Iraq has little choice but to turn to the militias," said Bruce Riedel, a former senior CIA expert on the region who is now at the Brookings Institution in Washington.

"The flaw in the coalition strategy for the last year is weak ground forces. Given the constraints on the US and its Arab allies, the only viable ground force option is Iranian-led Shi'ite Iraqis," he said.

"Of course this will alienate the Sunnis – both in Iraq and in Saudi Arabia – but Baghdad has no other serious option."