"Three people, including the Turkish vice consul, were killed in an armed attack targeting the consul and the consulate's employees in a restaurant in Arbil," the source said, adding the attackers had fled the scene.

Witnesses in the city said checkpoints had been quickly set up inside and around the neighbourhood of Ainkawa, which hosts numerous restaurants and the Turkish consulate.

Turkey confirmed that an "employee" at its Arbil consulate was killed in a shooting.

The attack was not immediately claimed.

Turkey is waging a major military offensive in Iraq's mountainous northern region to root out pockets of the Kurdistan Workers' Party (PKK).

The PKK, seen as a "terrorist" group by Turkey, the United States and the European Union, has waged an insurgency against the Turkish state since 1984 and operates rear bases in Iraq's autonomous Kurdish region.

Several rocket attacks have targeted diplomatic missions in Iraq in recent months, including rockets near the US and UK embassies in Baghdad's "Green Zone."

The US in May ordered all non-essential personnel of its Baghdad embassy and Arbil consulate to leave the country.

And in June, protesters gathered outside the Bahraini embassy in Baghdad,

Authorities in Iraq, which is witnessing a period of relative calm since declaring victory against the Islamic State group in 2017, have pledged to protect embassies.