The Islamic State of Iraq and Syria (ISIS) has declared itself an Islamic "caliphate" and called on factions worldwide to pledge their allegiance, Reuters reports.
ISIS, an offshoot of al Qaeda which has seized territory in Iraq and Syria, made the announcement in a statement posted on Islamist websites and Twitter on Sunday.
It also proclaimed its leader Abu Bakr al-Baghdadi as "Caliph" - the head of the state, the statement said.
"He is the imam and khalifah (Caliph) for the Muslims everywhere," the group's spokesman Abu Muhammad al-Adnani said in the statement.
The move poses a direct challenge to the central leadership of al Qaeda, which has disowned it, and to conservative Gulf Arab rulers who already view the group as a security threat.
"Accordingly, the "Iraq and Sham" (Levant) in the name of the Islamic State is henceforth removed from all official deliberations and communications, and the official name is the Islamic State from the date of this declaration," he said.
The Sunni Muslim militant group follows al Qaeda's hard-line ideology but draws its strength from foreign fighters battle-hardened from Iraq.
It seeks to re-create a medieval-style caliphate erasing borders from the Mediterranean to the Gulf. It deems Shi'ite Muslims to be heretics deserving death.