Australia issued arrest warrants for suspected Australian Islamic State fighters Khaled Sharrouf and Mohamed Elomar after the images, which also showed Sharrouf's 7-year-old son holding one of the heads, caused a global outcry.

The pair is believed to have been killed in an air strike on the Iraqi city of Mosul, which is under the control of the Sunni militant group. Their deaths were first reported late Monday by the Australian Broadcasting Corporation.

"The likelihood of verification in relation to Mr Elomar is probably imminent, however, in relation to Mr Sharrouf we're still seeking to verify the reports," Bishop told reporters on Tuesday.

"Given the security situation in Iraq it's difficult for our authorities to gain the kind of information that would be required to verify these reports."

Australia is on high alert for attacks by radicalized Muslims or by home-grown militants returning from fighting in the Middle East, having raised its threat level to "high" and unleashed a series of high-profile raids in major cities.

Sharrouf, who was convicted in 2005 as part of a plot to blow up a nuclear power plant in New South Wales state, and Elomar, a one-time professional boxer, became the public faces in Australia of the potential danger posed by foreign fighters.

The shocking photos helped catalyze public opinion behind a high-profile crackdown on militant activity by Australian Prime Minister Tony Abbott, as a result of which the government has secured expanded but controversial security powers.

Australian citizens now face up to a decade in prison for travel to overseas areas declared off-limits and Abbott is expected to this week introduce legislation to strip citizenship from dual nationals found to have engaged in militant acts.

He has also worked to halt the flow of funds to overseas groups. The government last year shut a money transfer business linked to Sharrouf's family on suspicions it transferred up to A$20 million ($15.45 million) to foreign militants.

Abbott last month ruled out an amnesty for Australians seeking to quit foreign militant groups and come home following reports that Sharrouf's wife was trying to negotiate a return for her and their young children.