Isis flag
The black flag has become heavily associated with the Isis groupGetty

A mosque in Sydney has defended its decision to auction off a flag associated with the militant group Isis (known as Islamic State) in order to raise funds.

The Markaz Imam Ahmad (MIA) mosque in the Australian suburb of Liverpool was found to be selling a black flag that resembled the one used by the militant group so it could raise money to purchase the building it resides in.

The mosque denied it was showing support for the group that is listed as a terrorist organisation and that the flag, which bore the Shahada — an ancient Islamic creed — and reads: "There is no god except God and Muhammad is the messenger of God," had been "hijacked" by IS.

MIA spokesperson Mohamed Rima said: "This flag has been in existence for more than a thousand years, long before any terrorist organisation misappropriated it for its own political goals.

"As for the money raised at the fundraising auction, which was held in late July, it was for the mosque and for no other purpose."

MIA head Sheikh Abu Adnan added: "We reject any attempts to tarnish the good reputation of our centre and pledge to stand firm against the current wave of Islamophobia.

"We also believe that scapegoating and fearmongering has the serious potential of radicalising disaffected youth."

Australia's immigration minister Scott Morrison described the decision to sell the flag now so heavily associated with the terrorist organisation as "stupid".

He said: "People auctioning these sort of items with children in the room is stupid. At best it is stupid and at worst it leads people to make all sorts of other conclusions."

Prime minister Tony Abbott warned anyone who is seen to be supporting or funding terrorism will be dealt with "severely".

The New South Wales government is also considering banning the IS flag. Premier Mike Baird told AFP: "We can't have a position where you are seeing any activity that is promoting terrorism, supporting terrorism."

Baird added the proposed action is not directed at the Islamic faith but at terrorist organisations who use it for their ideology.

"We obviously understand and appreciate and are very mindful of the tradition of Islam," he said. "This in no way goes in any way, shape or form against that."