Iraqi government employees in areas overrun by militants will not receive their salaries until after the end of hostilities, when they will be given back pay, the cabinet decided Tuesday.

"Employees in areas not subject to government control" will have their salaries held back and "distributed to them... after the end of military operations," a cabinet statement said.

Civil servants in major areas of five provinces overrun in a militant offensive led by the Islamic State of Iraq may not have been receiving salaries already due to difficulties on the ground.

But the decision formalises that, and means these state workers may be without pay for an extended period, adding to a litany of problems of living in conflict-hit areas.

And in notoriously corrupt Iraq, the eventual salary distributions could also offer a golden opportunity for graft.

Iraqi security forces are struggling to hold ground and have only conducted localised offensive operations since the crisis began on June 9, meaning the conflict could drag on for months or longer.

And even before the offensive began, all of one city west of Baghdad and part of another had been outside government control since early January.