Australia has only been asked to provide humanitarian assistance in northern Iraq, Foreign Minister Julie Bishop says.

Foreign Minister Julie Bishop says she doesn’t expect Australian troops to be sent back into Iraq to help US forces fight Islamic extremists.

Responding to comments from Defence Minister David Johnston that right-minded countries could not just sit back and watch events unfold, Ms Bishop stressed that Australia had only been asked to help provide humanitarian assistance.

“I don’t envisage that,” she said of the potential involvement of Australian troops.

“There’s been no request for it.”

Australia is deploying military aircraft to drop aid packages in northern Iraq following a request from the US, which has launched airstrikes to repel the Islamic State fighters.

The foreign minister has also revealed that the family of home-grown extremist fighter Khaled Sharrouf could face legal action if they return to Australia.

Sharrouf shocked the world by posting a picture on Twitter of his young son holding the decapitated head of a slain Syrian soldier.

Ms Bishop has already cancelled the passport of the 32-year-old militant from Sydney.

“Obviously we will take all of this into account in terms of the legal action that we can take if they return to Australia,” she said.

“But this imagery is shocking and it underlines what we’ve been saying about this threat to Australia and Australians from violent extremism.”

The boy’s grandfather, Peter Nettleton, father of Sharrouf’s Anglo-Australian wife Tara, said he was devastated by the image.

“I was gutted, totally gutted,” Mr Nettleton told News Corp.

“I don’t know what to think. I just feel sorry for Tara.”

But the boy’s uncle, Sharrouf’s brother Mostafa, says Australia should just forget about the image.

“He’s gone, forget about it. He’s forgotten about youse. I’m sure you’ve seen much worse than that,” he told Fairfax Media.

Ms Bishop refused to comment specifically on the political turmoil in Iraq, where its president has picked Haidar al-Abadi to replace Nouri al-Malaki as prime minister.

Australia has been a vocal critic of al-Maliki for failing to properly include Sunnis in his government.

“Political instability is the last thing Iraq needs at present given it’s under siege from ISIL terrorists,” she said.

“So we urge the government to act quickly to bring stability to Iraq and form a representative government.”