King Abdullah II of Jordan warned Tuesday that an Israeli-Palestinian peace deal was essential for combating Islamic extremists, saying the conflict served as a rallying cry for jihadists.

Abdullah told the European Parliament that the battle against the Islamic State group in Iraq and Syria was "first and foremost" a fight for Muslim nations to carry out.

Jordan has stepped up its role in the US-led coalition against IS after the group burned to death a captured Jordanian military pilot in a grisly video released last month.

But Abdullah said the root problem was the world's failure to "defend Palestinian rights".

"This failure sends a dangerous message," he said.

"And it has given the extremists a powerful rallying cry. They exploit the injustices and the lingering conflict, to build legitimacy and recruit foreign fighters across Europe and the world."

He added: "How can we fight the ideological battle, if we do not chart the way forward towards Palestinian-Israeli peace?"

As a country that has made peace with Israel, Jordan has played a mediating role in the peace process.

Around 20,000 foreign fighters are believed to have left their homelands to join extremist groups in the past few years -- including an estimated 4,000 since 2012 from western Europe.

Abdullah however said that Muslim countries had to lead the fight against IS and other extremists.

"This is a fight that has to be carried out by Muslim nations first and foremost. A fight within Islam," he said.

Introducing the king to European lawmakers, Parliament President Martin Schulz offered his sympathies over the murder of the pilot.

"It's hard to imagine people could commit such gruesome acts," he said.