Pin-point attacks by coalition jets, the Russian air campaign and successes by ground troops has reduced the fanatics to their lowest level for two years.
Deputy US Secretary of State Antony Blinken said: “Working by, with and through local partners we have taken back 40% of the territory that Daesh controlled a year ago in Iraq and 10% in Syria.
“We assess Daesh’s numbers are the lowest they’ve been since we began monitoring their manpower in 2014.”
Since then US-backed Iraqi and Kurdish forces have pushed Isis fighters back from the cities of Tikrit and Ramadi and taken territory in northern Syria.
Meanwhile Syrian forces receiving Russian support have recaptured the city of Palmyra.
Two years ago the CIA believed the group had up to 31,500 fighters.