Australia will back the Philippines in the war against pro-Islamic State fanatics by sending cutting-edge spy planes over the war-torn nation.

Defence confirmed Australia will fly P-3 Orion aircraft over the Mindanao region, where a bloody battle between the army and jihadists has entered its fifth week.

The revelation fuels fears of battle-hardened IS militants finding a foothold in South East Asia after losing ground in the Middle East, reports Sydney Morning Herald.

Threats to regional security loom large after a wave of violence in the nation's south, including the beheading of a police chief.

Australia will fly P-3 Orion aircraft (pictured) over the Mindanao region to back the war against pro-Islamic State fanatics

A bloody battle between the army and jihadists on Marawi city (pictured: smoke billows from a battle zone) has entered its fifth week

'The regional threat from terrorism, in particular from Daesh [Islamic State] and foreign fighters, is a direct threat to Australia and our interests,' Defence Minister Marise Payne told the newspaper.

'I recently spoke with my counterpart Secretary of Defence Delfin Lorenzana about how Australia can assist the Philippines in its fight against extremists. We agreed the best way to defeat terrorism in our region is for us to work together.'

The use of the planes is classified, however they may pick up signals like mobile phone calls and take aerial images of battle zones to tip-off the Philippines military.

Fears are mounting that would-be terrorists from Australia and other nations could beef up the ranks of four Islamist groups waging the insurgency.

Therea are fears IS militants are finding a foothold in South East Asia after losing ground in the Middle East (pictured: a soldier with an IS flag in Marawi city)

An armored personnel carrier moves amongst stuck vehicles of residents fleeing Marawi

A recent wave of violence has heightened the threats to regional security (pictured: ISIS media shows an extremist waving the ISIS flag in the region)

On Wednesday, an army of Islamists held 31 hostages captive - including 12 children - using some as human shields during a gun battle with troops in Pigcawayan town.

Fighting in Marawi has claimed at least 350 lives, with the figure expected to rise amid reports of fleeing residents seeing scores of bodies in bomb-ravaged debris.

Australia and neighbouring nations are holding a summit in August to address the threat of homegrown militants returning from foreign battlefields.