The Islamic State group (IS) has suffered a double setback, with the Pentagon saying the militants' second-in-command was killed in a US raid and Syrian troops recapturing the ancient citadel in Palmyra.

Key points: Abd ar-Rahman Mustafa al-Qaduli was thought to have died last year

Abd ar-Rahman Mustafa al-Qaduli was thought to have died last year Pentagon chief won't reveal details of the finance officer's death

Pentagon chief won't reveal details of the finance officer's death Syrian troops and Russian warplanes are recapturing Palmyra

Pentagon chief Ashton Carter announced the killing of Abd ar-Rahman Mustafa al-Qaduli, referring to him as Haji Imam and describing him as the group's top finance officer.

He was alternatively known as Abu Alaa al-Afri, who was thought to have been killed in May 2015.

"We are systematically eliminating IS's cabinet," Mr Carter told reporters, referring also to the killing early in the month of Omar al-Shishani, the man known as "Omar the Chechen" who was effectively IS's defence minister.

"The momentum of this campaign is now clearly on our side."

Mr Carter declined to say whether al-Qaduli had been killed by a drone strike or in a bombing raid involving manned aircraft.

Nor would he specify whether the attack occurred in Syria or Iraq, though he said that any action in Iraq would only have been taken with Iraqi Government approval.

The US Justice Department had offered a bounty of up to $US7 million for information leading to al-Qaduli.

"A few months ago when I said we were going to go after ISIL's financial infrastructure, we started with storage sites, and now we've taken out the leader who oversees their finances, hurting their ability to pay and hire recruits," Mr Carter said, using an alternate acronym for the group.

"Our campaign plan is first and foremost to collapse ISIL's parent tumour in Iraq and Syria."

Meanwhile, the fresh gains in Palmyra by Syrian troops backed by allied militia and Russian warplanes came nearly a year after IS overran the UNESCO World Heritage Site, sparking global concern.

Syrian troops advancing on the Palmyra citadel on the outskirts of the ancient city. ( AFP )

"Our armed forces, in coordination with the popular defence forces, have taken control of the ancient Palmyra citadel after inflicting many losses in the ranks of the terrorist group Daesh," Syrian state television said, using another name for IS.

The army has also cut off the main Palmyra-Deir Ezzor highway leading to the Iraqi border, the report said citing a military source.

The jihadist group had taken over the citadel on May 23 last year and raised its notorious black and white flag over it.

The group has since blown up UNESCO-listed temples, looted relics that dated back thousands of years, and beheaded 82-year-old archaeologist Khaled Assad who had looked after Palmyra's ruins for four decades and hung his body in public.

Built in the 13th century, the citadel is Palmyra's main Islamic-era monument.

UNESCO chief Irinia Bokova welcomed the push to recapture Palmyra.

"For one year, Palmyra has been a symbol of the cultural cleansing plaguing the Middle East," Ms Bokova said.

Image allegedly showing the destruction of the Baal Shamin temple in Syria's Palmyra by the Islamic State militant group. ( Storyful/Islamic State )

Liberation of ancient ruins slowed by mines

Earlier, Syria's antiquities chief Maamoun Abdelkarim told the AFP news agency the army had also made gains elsewhere in the city.

"In the south-west, the army has liberated the district of hotels and restaurants as well as the Valley of the Tombs," he said.

The Syrian Observatory for Human Rights, a Britain-based monitor, reported that Russian and Syrian warplanes were continuing air strikes in the area.

"The army is now 600 metres from the Temple of Bel but it is advancing slowly because of mines and, above all, to protect the city, which is an ancient treasure," Mr Abdelkarim said.

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IS claimed in September to have destroyed the Temple of Bel, which UNESCO had described as one of the best preserved and most important first century religious edifices in the Middle East.

Palmyra's full recapture would be a major strategic and symbolic victory for President Bashar al-Assad, since whoever holds it also controls the vast desert extending from central Syria to the Iraqi border.

IS also faces mounting pressure in neighbouring Iraq where the army said on Thursday it had launched a long-awaited offensive to retake the second city of Mosul, a key IS hub since a lightning assault in June 2014.

Experts have warned that any battle to retake Mosul would be difficult, given the significant number of jihadists and civilians in the city and the time IS has had to prepare defences.

AFP