The terrorist group has taken control of Mosul and is moving on other areas of the northern Iraq province of Nineveh, including Hawijah, Zab, Riyadh, Abbasi, Rashad and Yankaja.
Army officers told Reuters their troops are demoralized and no match for ISIS jihadists.
Appearing on national television, al-Malaki said the government has "created a special crisis cell to follow up on the process of volunteering and equipping and arming."
The Prime Minister's cabinet "praises the willingness of the citizens and the sons of the tribes to volunteer and carry weapons… to defend the homeland and defeat terrorism," he said.
Malaki's address reveals how the modern state operates when faced with a serious challenge. Under normal conditions a government will strive to make certain individuals are disarmed and unable to defend themselves.