IS has lost 90% of its territory: Payne

Islamic State still retains strongholds in the Middle East despite the liberation of 90 per cent of territory once held by the terrorist group, Defence Minister Marise Payne has warned parliament.

Senator Payne updated the upper house on Monday after Iraqi and coalition forces liberated the Iraqi city of Tal Afar in August, insisting it was vital IS was defeated in Iraq and Syria to deny it a base of operations and a narrative of success.

"We know that fleeing Daesh fighters will seek refuge and a new base of operation somewhere around the world and our region is vulnerable," she said.