Australian troops will potentially be deployed to the Philippines to help with the fight against Islamic State with fears IS fighters are gathering on one of the islands.

Australian soldiers could be sent to Marawi City to help train Filipino anti-terrorist fighters after IS-backed rebels have been fighting in the city for the last three months, News Corp reports.

ISIS-linked militants took over the city in the country's south in May, killing at least 550 people including 420 terrorists.

Australian troops could be sent to Philippines to combat IS in Marawi City (pictured)

Marawi City (pictured) has been fighting IS-linked militants since May, hundreds dead

Australian soldiers (pictured) could be training the Filipino soldiers to help with fight on terror

It is suspected IS fighters are gathering in on Mindanao island with plans to announce a new caliphate.

It is believed no official request for training has been received but the Defence Department and Australian Defence Force expect an approach, the publication reports.

Australia's Defence Minister Marise Payne condemned the IS-inspired attacks in Marawi, telling Daily Telegraph the country was ready for more.

'The siege of Marawi City by Daesh (IS) affiliates poses a threat to Australia's interests and regional security,' Ms Payne said.

For about $50, Filipino families are being recruited to support IS with promises of more money if they recruit others, the publication suspects.

In late June, about 300,000 residents were reported to be displaced.

News Corp suspects Filipino families in Marawi (pictured) are being bought by IS for $50 after hundreds of thousands of people have been displaced since May

It is believed no official request for training was received but Defence Department expect it

More than 500 people have died including more than 400 terrorists since the conflict in Marawi began in May (pictured)

'The message from Syria is that if it is getting too difficult to cross over, so if you can't get to Syria, go to the Philippines,' Institute of Policy Analysis of Conflict director Sidney Jones told ABC News.

Members of the Maute Islamist group overran Marawi in May leading to hours of pitched gun battles in the streets.

A police chief was been beheaded, 21 people killed and a Catholic priest taken hostage when more than 100 fighters stormed the city.