The new cadre of forces will head to the al-Asad Airbase in Western Iraq and will include 50 trainers, 90 soldiers to protect the base and 30 to set up a headquarters.
About 80 engineers will also be sent on a 6-month mission to work on the infrastructure there.
Fallon made the announcement in a written statement to the parliament on Thursday, saying the move would add to Britain’s "significant contribution" to the US-led military campaign.
There are currently some 300 British military personnel stationed in Iraq, who are reportedly tasked with training local forces.
The UK has also been conducting air raids against alleged positions of ISIS terrorists in Iraq and Syria, as part of the US-led military campaign that started in late 2014, without any authorization from the UN.
"Our strike aircraft have now conducted around 900 airstrikes against ISIS targets in Iraq and Syria and our intelligence, surveillance and reconnaissance aircraft provide niche and highly-valued capabilities," Fallon noted.
"On the ground, our forces have helped to train more than 18,000 members of the Iraqi security forces, including Kurdish forces,” the defense minister said.
The new deployment comes less than a week before John Chilcot delivers the result of his inquiry on Britain’s involvement in the 2003 Iraq War.
During the US-led invasion of the Arab country, former UK prime minister Tony Blair’s government sent 120,000 members of the British armed forces and civilians to the country, proving its role as then US President George W. Bush’s chief military ally.
The two allies said they invaded Iraq to eliminate its “weapons of mass destruction” but no such weapons were ever found.
More than one million Iraqis were killed as a result of the invasion, and subsequent occupation of the country, according to the California-based investigative organization Project Censored, Press TV reported.
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