The Islamic State group maintains a force of thousands of fighters who pose a potent threat in the Middle East as its leaders continue to encourage attacks on the West, a top US intelligence official said Tuesday.

The stark warning by Director of National Intelligence Dan Coats came even as acting Pentagon chief Patrick Shanahan announced that IS was poised to lose all its remaining holdout areas in Syria "within a couple of weeks" and the risk of terrorism had been "significantly mitigated."

"ISIS still commands thousands of fighters in Iraq and Syria, and it maintains eight branches, more than a dozen networks, and thousands of dispersed supporters around the world, despite significant leadership and territorial losses," Coats said in a new report to Congress, using an alternate name for the group.

He added that the jihadists, who once held vast swaths of territory in Syria and Iraq but are now reduced to a shrinking enclave of around four square kilometers, would exploit any reduction in counter-terror operations to stage a comeback.

"The group will exploit any reduction in CT pressure to strengthen its clandestine presence and accelerate rebuilding key capabilities, such as media production and external operations.

"ISIS very likely will continue to pursue external attacks from Iraq and Syria against regional and Western adversaries, including the United States."

Speaking to Pentagon reporters a short while later, Acting Defense Secretary Shanahan said more than 99.5 percent of the territory the jihadists once held has been recaptured and "within a couple of weeks it will be a hundred percent."

"The way I would probably characterize the military operations that we've conducted in Syria is that the risk of terrorism and mass migration has been significantly mitigated," he added -- offering what appeared to be a more optimistic assessment than Coats' report.

- US withdrawal -

President Donald Trump last month said the US and its allies had "beaten" IS, as he ordered an immediate troop withdrawal from the war-torn country.

But observers say the pronouncement was premature, as evidenced by a suicide attack this month in the northern city of Manbij, where four Americans, including two troops, were among those killed.

Shanahan, who was previously deputy defense secretary, succeeded Jim Mattis at the start of the year after he quit in the aftermath of Trump's declaration of victory over IS and the withdrawal of forces from Syria.

Coats' report said IS was focusing on exploiting sectarian tensions in Iraq and Syria, adding it "probably realizes that controlling new territory is not sustainable in the near term."

"We assess that ISIS will seek to exploit Sunni grievances, societal instability, and stretched security forces to regain territory in Iraq and Syria in the long term," he added.

On the subject of Al-Qaeda, the once mighty terror outfit responsible for the 9/11 attacks, the report said that while the group's leaders were encouraging attacks against the West including the US, most of its affiliates' "attacks to date have been small scale and limited to their regional areas."

It added Al-Qaeda's affiliates in East and North Africa, the Sahel, and Yemen "remain the largest and most capable terrorist groups in their regions.

"All have maintained a high pace of operations during the past year, despite setbacks in Yemen, and some have expanded their areas of influence."

Al-Qaeda elements in Syria were continuing to undermine efforts to resolve that conflict, while its South Asia branch was providing support to the Taliban.

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