Defence department secretary Dennis Richardson has dismissed concerns that Islamic State is seeking to acquire nuclear weapons.
Mr Richardson said every terrorist organisation over the past two decades had aspired to a nuclear capability, either an atomic bomb or a radiological "dirty" bomb.
But there was no suggestion that IS, or Daesh, could do that.
"We would not see a risk in Iraq at this point in time in terms of Daesh and nuclear weaponry. We think that's a touch exaggerated," Mr Richardson told a Senate committee in Canberra on Monday.
Acting defence force chief Ray Griggs said there were appropriate precautions in place for Australian troops in Iraq if intelligence indicated there was a genuine threat.
The joint Australian and New Zealand training team have now starting training members of the Iraqi Army's 76th Brigade
"There is no doubt the performance of the Iraq security forces has been variable. There is no dodging that," Vice Admiral Griggs said.
"It was variable during the fight for Ramadi. There were some units that performed exceptionally well and some that performed less well."
That was why the training mission was so critical in building the skills to retake territory.
The Iraqi Army's 76th Brigade had even requested additional training which was a good sign.
Vice Admiral Griggs said the loss of Ramadi was a setback, although the vast majority of the city had been in Daesh hands for many months.
Despite concerns that Daesh was now poised to seize Baghdad, the security of the capital was largely unchanged.
Mr Richardson said the conflict would still be measured in years rather than months.
"It's very important that the government in Baghdad be seen to represent all Iraqis and not just a section of Iraq," he said.
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