The military disputes the group's claims that fighters held two-thirds of the southern city. The offensive to take back Marawi from pro-Daesh Maute militants has been going on for more than three weeks.
The Philippine military said on Tuesday that Daesh holds 20 percent of Marawi City, disputing an earlier claim by the group's news agency Amaq that its "fighters are spread in more than two-thirds" of the southern town.
"On the contrary, out of 96 barangays [neighbourhoods], they are holding portions in Marinaut, Lulut, Mapandi and Bongolo Commercial District, which only comprise 20 percent of the whole Marawi City ... and it's getting smaller everyday," Lieutenant General Carlito Galvez, head of military command in the region, said.
Fighting erupted on May 23 after a bungled raid aimed at capturing Isnilon Hapilon, whom Daesh proclaimed as its "emir" of southeast Asia in 2016 after he pledged allegiance to the group. The US Department of State has a bounty of up to $5 million for his arrest.
Philippine President Rodrigo Duterte has offered a bounty of 10 million pesos ($200,000) to anyone who "neutralises" Hapilon, and 5 million pesos for the Maute brothers who head the eponymous pro-Daesh group.
Nearly 200 people have been killed and over 170,000 have been forced from their homes as troops battle Maute. The lesser-known group pledged allegiance to Daesh in 2014.
The battle for Marawi City has raised concerns that Daesh, which is on the back foot in Syria and Iraq, is attempting to build a regional base on the Philippine island of Mindanao, further posing a threat to neighbouring Indonesia, Malaysia and Singapore.
Duterte has said that the Marawi fighters were financed by drug lords on Mindanao island, which has suffered for decades from banditry and insurgencies. Duterte is waging a war on drugs which has taken thousands of lives.
After the siege of Muslim-majority Marawi City began, Duterte declared martial law in Mindanao, with support from allies in the Congress. On Monday, six opposition lawmakers challenged the move in a petition to the Supreme Court.