CANBERRA - Australia will share intelligence with Iran as the two combat the rise of Islamic State (IS), Australian foreign minister Julie Bishop told local media on Monday.

Bishop said the two countries had agreed to share information on Australia citizens fighting in Iraq as part of each country's efforts to quell the influence of IS fighters.

Given Iran was formerly labeled by the United States as part of the "axis of evil", the cooperation between it and Australia on matters of international security is a monumental step.

"It was an informal arrangement whereby we'd share intelligence that would give us information on the Australians who are taking part," Bishop said.

"I believe Iran has information that we would seek and they were very agreeable to share that information with us."

She said that during her meeting with Iranian President Hassan Rouhani on Saturday that he described IS as the "most significant global threat at present".

Bishop said Iran had the ability to influence politically and militarily with Iraq, allowing Australia indirect access into places it cannot go alone.

"They are very present in Iraq. The (Iranian) Revolutionary Guard is on the ground, they are working with the security forces. They are carrying out operations in Tikrit and elsewhere, they are all over the place," she said.

"They also have an influence over the Shia militia, who are operating within Iraq, and we had a discussion about the Shia militia and their role."

"They are in Iraq in places that we are not. They also have a very sophisticated intelligence network and there is a lot of information that they've been gathering."

Soon after Bishop accepted an invitation to become the first Australian minister in 10 years to visit Tehran, Bishop said Australia first broached the subject of intelligence sharing with Iran in October last year.

That push became more urgent when it became clear in December that Iranian refugee Man Haron Monis, the man responsible for the Sydney siege where more than a dozen hostages were held in a city cafe for 17 hours, was a wanted criminal in Iran.

Bishop stressed that Australia's small military presence in Iraq would not be involved with Iranian forces.

"I wanted there to be no misunderstanding of Australia's role there, that it is limited to supporting the Iraqi government, that we are there at the initiation of the Iraqi government," she said.