The photograph of a young boy holding the decapitated head of a slain Syrian soldier and published in Australian media on Monday underscored the barbarity of Islamist State militants, Australian Prime Minister Tony Abbott said.
The image was posted on Twitter and showed the boy, believed to be the son of Sydney jihadist Khaled Sharrouf, The Australian newspaper said, adding that the boy was aged 7.
The image was taken in the northern Syrian city of Raqqa and was posted last week on the Twitter account of Sharrouf, Australia's most wanted terrorist who fled to Syria last year and is now an Islamist State fighter.
Abbott said the photograph was "more evidence of just how barbaric this entity is".
The photo was "pretty graphic evidence of the real threat that ISIL represents", said U.S. Defense Secretary Chuck Hagel, in Sydney ahead of annual Australia-United States Ministerial Consultations (AUSMIN).
The Australian government believes at least 150 of its citizens are involved in fighting or actively supporting the Islamic State (ISIL) in Syria and Iraq.
It said last month it was putting Islamic State on its list of banned terrorist organisations.
The United States is exploring options to evacuate thousands of Iraqi civilians trapped by Islamic militants on a barren mountain in northern Iraq, after four nights of humanitarian relief airdrops, U.S. officials said on Sunday.
While the airdrops appear to have provided urgently needed aid, the harsh conditions of the Sinjar mountain range in mid-summer have taken scores of lives among Iraq's Yazidi minority, who are threatened by hardline militants from the Islamic State.
Australia, along with France and Britain, has offered assistance to provide aid to the trapped people.