The United States has vowed there will be no escape for Australian foreign fighters from the battlefields of Syria and Iraq under its new approach of hemming in the Islamic State terror group and killing its fighters, known as "annihilation".

After the annual AUSMIN talks between the US and Australia, Defence Secretary James Mattis fleshed out his new tactic, which aims to stop foreign fighters spreading around the globe as their so-called caliphate crumbles - a tactic strongly supported by Australia.

"This is an enemy against all civilisation," Mr Mattis said. "In this campaign, where before we were shoving them from one town to another and they're falling back, we now take the time to invest the town and make certain that foreign fighters cannot escape to return to Paris, France, to Australia, to wherever they came from, and bring their message of hatred and their skills back to those places and attack innocent people."

To "invest", in military terms, means to surround an enemy and prevent their escape.

Mr Mattis joined US Secretary of State Rex Tillerson, Foreign Minister Julie Bishop and Defence Minister Marise Payne in Sydney on Monday for the AUSMIN talks, which also covered North Korea, Afghanistan and China's militarisation of artificial islands in the South China Sea.

They met as British police and intelligence agencies continued to investigate the Saturday night London attack in which Islamist extremists used a van and knives to kill seven people and hospitalise a further 48, including two Australians.

About 100 Australians are believed to still be fighting with the group in Syria and Iraq. They would present a major concern to intelligence and law enforcement agencies if they were to return but could not be prosecuted for lack of evidence.

Senator Payne said Australia strongly supported the new "annihilation" tactic. Although the Coalition government has made a series of legislation changes to deal with the return of any foreign fighters, it would prefer they never made it back to Australia, she said.

"Our absolute preference is, as far as possible, to ensure that those who have left their countries to fight in the name of Daesh or ISIS in the Middle East, are not able to return to those countries and perpetrate any of their atrocities in those areas."

Mr Mattis said the US would continue to take great care in avoiding civilian casualties but added that "at the same time, we're going to have to take that caliphate down, or the attacks that you've seen going on around the world that you all have reported on will continue".

Mr Mattis and Mr Tillerson, both regarded as foreign policy traditionalists in Donald Trump's administration that has otherwise caused international jitters about US leadership, are on a reassurance mission to calm nervous allies.

Mr Tillerson stepped up pressure on China to stop its militarisation of the South China Sea and rein in North Korea, saying that as a rising economic power China had growing security responsibilities as well.

"China is a significant economic and trading power. We desire productive relationships, but we cannot allow China to use its economic power to buy its way out of other problems, whether it's militarising islands in the South China Sea or failing to put appropriate pressure on North
Korea. They must recognise that, with a role as a growing economic and trading power comes security responsibilities as well."

Asked about Mr Trump's withdrawal from the Trans-Pacific Partnership trade pact and the Paris climate accord, Mr Tillerson said these decisions did "not define the trade relationship between the United States and Australia nor other relationships on issues that are of mutual importance".

He acknowledged there were concerns about the US commitment to the region but said "that's why we're here".

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