Australia may be inadvertently helping to arm a group it has labelled as terrorists in the fight against Islamic State (IS) in Iraq.

The PKK or Kurdistan Workers Party has been designated a terrorist group by Australia since December 2005.

• PM’s Iraq decision could lead to never-ending war

However it’s reported the PKK is now working closely with the Kurdish Peshmerga forces who are being armed by Australia and other nations working to defeat the IS extremist group.

Fairfax Media reports it has evidence the PKK are undertaking covert operations with Peshmerga forces in Kurdistan and Iraq and working hand-in-hand in several regions.

However, it reports there have been no indications so far that the PKK have had access to Australian-delivered munitions.