Defence Minister David Johnston says the situation in Iraq could turn very nasty, and has refused to rule out backing US military efforts in the country.

Defence Minister David Johnston says Australia is prepared to back up US forces as they fight to repel an extremist onslaught in the north of Iraq.

But Australia at this stage has not been asked to play a combat role, he says.

Australia has already offered to participate in airdrops of food and water to Iraqis hiding from the Sunni extremists on Mount Sinjar.

Prime Minister Tony Abbott on Monday said it could also join the humanitarian airlift to rescue thousands of endangered civilians.

But Senator Johnston indicated Australian forces could support US efforts to defend the city of Irbil from the Islamic State of Iraq and the Levant, known as ISIL or ISIS.

The United States last week began airstrikes to repel the militants.

“We are ready to assist in whatever way we can should we be asked to assist by the Americans and Iraqi government,” he told ABC radio.

The defence minister said the threat posed by the terrorist group was serious, and “anything was to be expected”.

“This could turn very, very nasty in a very short space of time,” he said.

“I don’t think right-minded countries can just sit back and watch atrocities unfold … without taking some action.”

Mr Abbott described the Islamic State of Iraq and the Levant as a terrorist army that posed “extraordinary” problems for the Middle East and the wider world.

He pointed to new pictures of an Australian child holding up the decapitated head of a slain Syrian soldier published in Australian papers on Monday.

“We see more and more evidence of just how barbaric this particular entity is,” he told ABC radio.

Mr Abbott, who is in the Netherlands, will fly to London later this week for talks with the British government and officials about counter-terrorism operations and the deteriorating security situation in Iraq.

Labor says it supports Australia’s humanitarian effort in Iraq, but has not been consulted on any need to commit troops.

“The government has not spoken to Labor about that at all,” Labor leader Bill Shorten told reporters in Melbourne.

“But when it comes to humanitarian relief, Labor is signed up for that.”