New South Wales premier Mike Baird has refused to rule out the possibility of banning the Islamic State (IS) flag across the state.

This comes after reports of an IS flag recently being auctioned at a Sydney mosque fundraiser.

Mr Baird said a ban on the flag “is something we will consider and work with community groups about but we can’t have the position where you are seeing any activity that is promoting terrorism, supporting terrorism.”

Islamic leaders said IS had hijacked the Shahada symbol displayed on the flag, which has been used by Muslims for centuries. Despite this, Mr Baird stressed the need for appropriate action.

“It is a flag that is used by ISIS and ultimately that is something that we have to respond to and we have to have a zero tolerance approach to,” he said.

Also calling for the ban is NSW MLC Reverend Fred Nile. Rev Nile criticised the IS flag auction, calling it “disgraceful.”

“They fly the flag as something to be proud of – they should be ashamed of beheading people and selling women into slavery.

“Anything that is recruiting these young men should be stopped and they should not be misled to think that this is something to be proud of. It’s a flag of death, a flag of blood and no one should be celebrating it at all and certainly not auctioning it,” Rev Nile said.

ACL has recently condemned the brutality of IS militants against religious minorities in Iraq and Syria.

In response to the persecution, ACL launched a campaign calling on the federal government to increase its humanitarian intake. Almost 20,000 people to date have signed the online petition.