An Australian teenager who went missing in June has surfaced in an Islamic State (IS) video in which he warns the fighters will not put down their arms until their flag flies over every country in the world.

Surrounded by dozens of armed, black-clad jihadists, the fighter — believed to be 17-year-old Abdullah Elmir from Sydney — delivers a message intended for the citizens of the United States, Britain, and "especially" Australia, in which he insists IS will not be defeated by the international offensive against it.

"You threaten us with this coalition of countries. Bring every nation that you wish to us," he says. "Bring every nation that you want to come and fight us. It means nothing to us."

"Whether it's 50 nations or 50,000 nations, it means nothing to us. Bring your planes.

"Bring everything you want to us. Because it will not harm us. Why? Because we have Allah. This is something you do not have."

Elmir disappeared from his home in Bankstown, southwest Sydney, with a 16-year-old friend after telling his family he was going fishing, according to reports. He later contacted them saying that he was in Turkey and about to "cross the border."

The family's lawyer explained at the time that the teenager's mother interpreted that to mean he was entering Iraq or Syria; said to be distraught, they claim the boy has been "brainwashed."

The friend was reportedly located by his father on his way to Iraq and quietly returned to Australia.

Elmir, however — if he is confirmed to be the speaker in the video — appears to have become deeply embedded in the group. Using the nom de guerre Abu Khaled, dressed in military attire, and brandishing an AK-47, he addresses a warning to US President Barack Obama and Australian Prime Minister Tony Abbott:

"These weapons that we have, these soldiers, we will not stop fighting.

"We will not put down our weapons until we reach your lands and until we take the head of every tyrant and until the black flag is flying high in every single land, until we put the black flag on top of Buckingham Palace, until we put the black flag on top of the White House.

"We will not stop and we will keep on fighting. And we will fight you and we will defeat you."

Australia has assumed a key role in the US-led alliance attempting to beat back the Islamic State as the extremist group attempts to carve out an Islamic caliphate in Iraq and Syria. It has supplied 600 military personnel to the offensive and has deployed six Super Hornet fighter jets which have been running bombing missions over IS targets in Iraq since the beginning of the month.

Foreign Minister Julie Bishop also announced this week that a deal had been reached with the Iraqi government to send in 200 members of the Australian special forces who have been waiting in the United Arab Emirates. They are to help train and advise local forces, and Bishop reiterated that Australia was not currently contemplating putting any boots on the ground in a combat role.

Australia is one of several Western countries that have seen a number of citizens travel to the Middle East to join the Islamic State. In August, a photograph of a seven-year-old Australian boy holding a severed head in Syria — posted on Twitter by his jihadist father with the comment "That's my boy" — was described by US Secretary of State John Kerry as "one of the most disturbing, stomach-turning, grotesque images ever displayed."

Concerned about potential blowback from the conflict as trained IS fighters return to the country, Abbott's government has raised the terror threat level to "high," the first time it has done so since the alert system was established 11 years ago. The prime minister cited intelligence that extremists had the "intent and capability" to mount attacks on Australian soil, though stressed that no specific plot had been uncovered.

Abbott has insisted that Australia will not be deterred from the fight against the IS. In a statement following the release of the video, he said it once again "highlights the threat posed by ISIL (IS)."

"ISIL is a threat that reaches out to Australia and our allies and partners," he said.

"That is why Australia has joined the coalition to disrupt and degrade ISIL in Iraq and is giving our law enforcement and security agencies the powers and resources they need to keep Australia and Australians as safe as possible," he said.