The Australian-Lebanese dual nationals were arrested in a local army raid after a Syrian born IS member was captured last year, News Corp reported on Friday.
After an interrogation it's understood he admitted to working with the three Australians whom he lived with.
The trio reportedly don't wish to return to Australia.
Cabinet minister Christopher Pyne said the government has the power to strip dual nationals fighting overseas of their Australian citizenship and will do so if warranted.
"We will look very carefully at what those three have been doing and of course give them a very fair hearing but we will take action, if necessary, to protect Australians from potential terrorists," he told Nine Network.
Justice Minister Michael Keenan has declined to comment directly on the case but on Thursday met with Lebanese police and intelligence chiefs during a visit to the region.
