A lone Kurdish flag flutters in the wind next to YPG Kurdish fighters standing on the hill after they took over from Islamic State militants near Kobane on Friday.

AFP

An attack by the Islamic State group on the Syrian town of Kobane has stalled but, in neighbouring Iraq, government troops are months from mounting a major fightback, US officials said.

US-led aircraft have flown nearly 6,600 sorties in the air war against IS in Iraq and Syria, and dropped more than 1,700 bombs, the US military said.

The air strikes have helped Kobane's Kurdish militia defenders hold out against the more heavily armed jihadists but have not stopped IS making new gains in parts of Iraq.

US Defence Secretary Chuck Hagel acknowledged that the results of the air campaign had been "mixed" but insisted that the overall strategy was "working".

Kurdish forces in Kobane have been battling the jihadists for more than five weeks but a US official expressed confidence that the town would not fall.

"I think the Kurdish defenders... are going to be able to hold," the official at US Central Command said, speaking on condition of anonymity.

It was a sharp change in assessment from just Sunday when US officials spoke of a "crisis" situation as Washington made its first arms drops to the town's defenders.

The battle for Kobane is a high-profile one for both the jihadists and their coalition opponents as it has been conducted under the gaze of the world's media gathered just across the border in neighbouring Turkey.

Coalition aircraft carried out fresh air strikes west of the town overnight, in an area where the IS jihadists had gained some ground in recent days, the Syrian Observatory for Human Rights said on Friday.

"Heavy losses are being inflicted on the group every day - witnesses have told us of the bodies of its fighters lying in the streets," the Britain-based monitoring group said.

Kurds say their fighters are exhausted and anxious for promised reinforcements from Iraq's autonomous Kurdish region.

The region's parliament agreed on Wednesday to send Iraqi Kurdish peshmerga fighters after Turkey said it would allow 200 of them to travel through its territory to Kobane.

The better-trained peshmerga have had some success in recapturing territory from the jihadists in northern Iraq but, further south, government troops have come under new pressure from IS.

The jihadists have captured more ground west of Baghdad in recent days, further reducing the government's shaky hold on Sunni-dominated Anbar province.

The US Treasury warned that the huge financial resources available to IS made it a formidable adversary for the coalition.

The group's "primary funding tactics enable it today to generate tens of millions of dollars per month," said the Treasury's undersecretary for terrorism and financial intelligence, David Cohen.

Because the group had "amassed wealth at an unprecedented pace" from different sources than most militant groups, choking off its income posed a particular challenge, he said.

Oil has also been sold to Kurds in Iraq, and then resold to Turkey, as IS has "tapped into a long-standing and deeply rooted black market connecting traders in and around the area", said Cohen.

Even Syrian President Bashar al-Assad's regime, whose troops are also battling IS, has "made an arrangement to purchase oil" from the group, he added.

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