An international coalition battling against Islamic militants in Iraq and Syria is beginning to win back territory and deprive the jihadists of key funds, US top diplomat John Kerry said Sunday as he denounced the group's "new level of depravity".

Washington has rallied more than 60 countries in the fight against the Islamic State group, and while Kerry told a global security conference it would be a long battle, he said there were signs the strategy was working.

Since August there have been 2,000 air strikes by the coalition, Kerry told the Munich Security Conference, saying it had helped to retake some 700 square kilometres in territory, or "one-fifth of the area they had in their control."

The US secretary of state did not specify whether the regained territory was in Iraq or Syria, but he added the coalition had "deprived the militants of the use of 200 oil and gas facilities ... disrupted their command structure.... squeezed its finance and dispersed its personnel."

"We are forcing them to change tactics," Kerry insisted, pointing to the defeat of IS in the Syrian Kurdish town of Kobane.

"Together we drove Daesh out," he said, using the group's Arabic name.

"They expected an easy victory, the media was predicting an easy victory ... instead after a costly battle in which they lost roughly a thousand of their fighters they were forced to openly acknowledge defeat."

The coalition has been spurred to boost its action following the murder of a captured Jordanian pilot, who was said to have been burned alive in an iron cage, in an action which Kerry called "a new level of depravity."

Referring also to the December massacre of the children in a Peshawar school, in Pakistan, Kerry said: "Let me be clear, there are no grounds of history, ideology, psychology, politics, economics advantage or disadvantage or personal ambition that justify the murder of children, the kidnapping and rape of teenage girls, or the slaughter of unarmed civilians.

"These atrocities can never be rationalized. They can never be excused, they must be opposed with every fibre of our being. And they must be stopped."

From the Sahel in western Africa, to Boko Haram in Nigeria as well as the militants in Iraq and Syria, Kerry said that "against this enemy, make no mistake, we are increasingly organizing and fighting back effectively. The world cannot and will not cower in the face of this extremism."