Australian special forces are moving into Iraq to advise the country's military in its fight against Islamic State (IS) militants.

Prime Minister Tony Abbott announced the breakthrough following talks with United States president Barack Obama at the APEC summit in Beijing.

Australia deployed 200 special forces soldiers to the Middle East in September, but for weeks they have been waiting for formal direction from the Iraqi government to begin their non-combat role.

Mr Abbott said the fundamentalist IS group had "declared war on the world" and that it was important to "respond strongly".

"They've declared war on the world and it's good that the president, working with the Iraqi government, has assembled a strong coalition to assist the Iraqi government to respond effectively and ultimately to regain control over its own territory," Mr Abbott said.

"So it is important to respond strongly, which is what the US-led Coalition is doing. Our priority at the moment is getting our special forces into Baghdad and then into the field on the advise and assist mission that we've set them.

"That's happening and I'm confident that our people will do good work."

Sorry, this video has expired Barack Obama and Tony Abbott discuss Australia's increased commitment in Iraq

However Mr Abbott said the fight against IS must be predominantly waged by Iraqi forces.

"No-one is going to fight harder for Iraq than Iraqis will fight for themselves," he said.

"We are helping them to reclaim their country from something which is evil, from something which is a menace to them and if it's allowed to remain will be a menace to all of us."

The troops will initially be based in Baghdad and later deployed to other parts of the strife-torn country.

Mr Obama said the leaders have also discussed what more can be done in the fight IS.

"I am having conversations with Australia, and other coalition partners that are already committed to putting trainers in to see how they can supplement and work with us in the overall effort," Mr Obama said.

"But the key point that I emphasised to Tony, and I'm emphasising to all our coalition members, is our task here is to help Iraqis help themselves."