A NATO drone strike in Afghanistan on Monday killed a former Taliban commander and Guantanamo detainee who was suspected of links to the Islamic State group, officials said.

The missile attack killed Mullah Abdul Rauf Khadim along with his son-in-law and three others in their car as they drove through Kajaki district in the volatile southern province of Helmand, Afghan officials said.

Local sources in Helmand said Khadim, who returned to Afghanistan after being released from Guantanamo Bay in 2007, recently switched his fighters' allegiance to IS.

But a senior Taliban commander told AFP that Khadim had "not formally joined IS and IS had not recognised him".

A Pakistani militant commander told AFP Khadim had been a key liaison between various factions which have broken away from the Afghan and Pakistani Taliban movements in recent months.

A statement from Resolute Support, the new name for the NATO mission in Afghanistan, said "coalition forces conducted a precision strike in Helmand province today on February 9, resulting in the death of eight individuals threatening the force".

It was not immediately clear why there was a discrepancy between the death toll given by NATO and Afghan officials.

Mohammad Jan Rasulyar, the deputy governor of Helmand, told AFP the strike hit the militants' vehicle at around 10 am.

The National Directorate of Security, the Afghan intelligence agency, confirmed the death of Khadim in a statement.

A Taliban source in the area also confirmed the attack to AFP.

Locals say Khadim's men, numbering around 300, were often in conflict with Taliban officials in Helmand.

"He had deep differences with the Taliban (leadership), which had recently sent a delegation to bury the hatchet, but he was killed before this was settled," a Taliban commander told AFP.

There have been fears of IS making inroads in Afghanistan since US-led NATO forces ended their combat mission in late December, after 13 years of fighting insurgents.

Australia's Foreign Minister Julie Bishop warned last week of the dangers of IS jihadists expanding operations to Afghanistan, even though there was little evidence of a presence there now.