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Australian PM Tony Abbott has voiced strong condemnation after an image emerged showing a boy, reportedly the son of an Australian ex-terror convict, holding a Syrian's severed head.
The image was posted on the Twitter account of Khaled Sharrouf, The Australian newspaper reported.
Sharrouf, who served time for planning attacks in Australia, has now joined Islamic State (IS) militants in Syria.
Mr Abbott said the image showed "just how barbaric" IS militants were.
The image shows a young boy - who looks to be of early primary school age - wearing a baseball cap and a blue shirt, using both hands to hold aloft the severed head.
A caption was included that read "That's my boy", The Australian said. It said the image was taken in the northern Syrian city of Raqa.
Another picture showed Sharrouf wearing combat fatigues posing with three children believed by security personnel to be his sons, the newspaper reported.
"What we've got to appreciate is that Islamic State... is not just a terrorist group, it's a terrorist army and they're seeking not just a terrorist enclave but effectively a terrorist state," Mr Abbott told Australian radio from the Netherlands, where he is discussing issues related to flight MH17, the passenger plane brought down in Ukraine.
"And this does pose extraordinary problems... not just for the people of the Middle East but for the wider world.
"And we see more and more evidence of just how barbaric this particular entity is."
Sharrouf was jailed in 2009 for four years for being part of a cell planning attacks in Sydney and Melbourne.
After his release he was banned from leaving the country but used his brother's passport to travel to Syria with his family.
Australia issued a warrant for his arrest in July after images emerged on what is thought to be his Twitter feed of another Australian, Mohamed Elomar, holding the severed heads of Syrian government soldiers.
'Back-up assistance' Last week, Australia announced laws that would restrict its citizens from travelling to certain countries, in a bid to prevent radicalised nationals fighting with extremist groups overseas.
Between 150 and 160 Australians are believed to be fighting with militants in the Middle East, according to reports.
Australia, meanwhile, says it is sending aircraft to help drop supplies to thousands of members of the Yazidi minority trapped by IS fighters on Mount Sinjar in Iraq.
US and British aircraft have already dropped supplies to help the stranded people, who lack food and water and face death at the hands of the militants.
The US has also conducted a series of air strikes against IS fighters.
On Monday Defence Minister David Johnston indicated Australian help might not be limited to aid drops.
"We're not ruling out providing some back-up assistance to the Americans as they go in and deal kinetically with this terrorist organisation," he said.
"We are ready to assist in whatever way we can should we be asked to assist by the Americans and the Iraqi government."