ABC reports that a contact close to the family believes the pair died in Mosul in the past few days.

Sharrouf made headlines when he posed with the decapitated head of a slain Syrian soldier.

The Sharrouf family recently hit the headlines when it came to light that his wife and children wanted to return to Australia.

The wife of a notorious Australian ISIS fighter who wants to return home with her children will face the full force of the law, Prime Minister Tony Abbott has vowed.

"That's what the Australian public expect. Crime will be punished," he told reporters in Canberra on Wednesday.

Mr. Abbott was responding to reports the family of Khaled Sharrouf's wife Tara Nettleton is trying to help her and the couple's five children return to Sydney.

She is suspected of helping to spirit her children to Syria via Malaysia after Sharrouf flew out of Sydney in December 2013 using his brother's passport.

"Crime is crime is crime, and criminals will face the full severity of Australian law, whether they're male or female," Mr. Abbott said.

He dismissed suggestions the family's return could be used to discourage others taking up the ISIS cause.

"I'm afraid you don't get off scot-free just because you say I've seen the error of my ways," he said.