The governments of Australia and Iran will share information on Australians fighting with the Islamic State group in Iraq under a new deal.

Foreign Minister Julie Bishop brokered the intelligence sharing deal as part of both countries’ efforts to break down the Islamic State militia.

The deal has reportedly come after months of negotiation between the two sides, spurred by the actions of Iranian refugee Man Haron Monis at Martin Place in Sydney last year.

Iran is known to have considerable influence over Iraq's government and intelligence services, and is involved training and advising Iraqi Shiite militias fighting the so-called Islamic State.

Ms Bishop said the link with Iran would bring solid information to local authorities.