Australian military spy planes will start flying over the southern Philippines to help the fight against Islamic State (IS) group.

It is one month since more than 500 militants, including foreign fighters, stormed the besieged city of Marawi.

Hundreds have been held hostage and more than 20 civilians have been killed.

Defence Minister Marise Payne said the Royal Australian Air Force's high-tech surveillance aircraft will operate over the southern region of Mindanao to fight "Daesh-inspired groups".

"The regional threat from terrorism, in particular from Daesh and foreign fighters, is a direct threat to Australia and our interests," Senator Payne said, using another acronym for IS.

"Australia will continue to work with our partners in South-East Asia to counter it."

She said the Philippines had accepted Australia's offer of two AP-3C Orion aircraft to provide surveillance support to the nation's armed forces.

"I recently spoke with my counterpart Secretary of Defence Delfin Lorenzana about how Australia can assist the Philippines in its fight against extremists," she said.

"We agreed the best way to defeat terrorism in our region is for us to work together."

Almost the entire Marawi population of about 200,000 have fled and the military are using fighter jets and helicopters to blast militants out.

The seizure of Marawi by fighters allied to IS, including some from the Middle East, has alarmed South-East Asian nations, which fear the ultra-radical group — on a back foot in Iraq and Syria — is trying to set up a stronghold on Mindanao that could threaten their region.