The US-led coalition fighting the Islamic State has pushed back the jihadist group in Syria and Iraq but it is a growing threat in Libya, where it could seize its oil wealth, US Secretary of State John Kerry said.
"In Libya, we are on the brink of getting a government of national unity, and that will prevent Daesh (IS) from turning Libya into a stranglehold on that country's future," Kerry told an anti-IS summit in Rome on Tuesday.
"That country has resources. The last thing in the world you'd want is a false caliphate with access to billions of dollars in revenue," he said.
At the opening of the Rome conference attended by 23 nations from the international coalition against IS, Kerry called for more financial contributions to stabilise recently liberated areas of Iraq and to address the humanitarian crisis in Syria.
So far extremists have been driven from 40 per cent of territory they controlled in its self-declared Islamic 'caliphate' in Iraq and 20-30 percent of territory it overran in Syria.
"We are still not at the victory that we want to achieve and will achieve, in either Syria or Iraq, and we have seen Daesh playing a game of metastasising out to other countries, particularly Libya," Kerry said.
Much of the focus of Tuesday's conference was on Libya, which is emerging as a new magnet for militants who have left the battlefields of Syria or who are coming afresh to the fight.
Italy, a member of the anti-IS coalition, is especially interested in routing IS in Libya, its former colony, where the turmoil is fuelling the smuggling of tens of thousands of migrants to Europe across the Mediterranean.
Under a UN backed plan for a political transition to end four years of deepening chaos since the 2011 ouster of late dictator Muammar Gaddafi, the country's warring factions are due to form a unity government.
A month after the deal was agree in Morocco, however, its implementation has been blocked by infighting.
Western nations are considering military intervention in Libya but want a go-ahead from the planned unity government before acting.