Australian military spy planes will start flying missions over the southern Philippines to help in the fight against Islamic militants terrorising the area, the government said Friday.

Fighters linked to the Islamic State (IS) group have been battling troops for a month around Marawi city in the Mindanao region in a conflict that has claimed hundreds of lives.

Canberra, which has an extensive defence cooperation program with Manila, said two high-tech AP-3C Orion aircraft will provide surveillance support to the Philippine military.

"The regional threat from terrorism, in particular from Daesh and foreign fighters, is a direct threat to Australia and our interests," said Defence Minister Marise Payne, using an Arabic acronym for IS.

"Australia will continue to work with our partners in Southeast Asia to counter it."

She recently spoke with her Philippine counterpart, Secretary of Defense Delfin Lorenzana, about how Australia could help and "we agreed the best way to defeat terrorism in our region is for us to work together".

The versatile AP-3C Orion's usually patrol maritime borders and played a prominent role in searching for missing Malaysian Airlines plane MH370, which went down in the remote Indian Ocean off Australia in 2014.

Philippine President Rodrigo Duterte declared martial law across Mindanao, home to 20 million people, on May 23 immediately after fighters flying the IS flag rampaged through Marawi.

Their assault on the city ignited an unprecedented urban war, which Duterte has warned is part of an IS campaign to establish a base in Mindanao.

The fighting has left Marawi, the most important Muslim city in the Philippines, largely in ruins.

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