The coalition will launch a joint military and political campaign against the militants, which could serve as a model for combating extremists around the world.
US Secretary of State John Kerry said the new coalition would implement a strategy, which seeks to “attack them in ways that prevent them from taking over territory”.
The new strategy would also “bolster the Iraqi security forces, others in the region who are prepared to take them on, without committing troops of our own”, he added.
In a joint statement with Secretary Kerry, issued by their offices in Washington, Secretary of Defence Chuck Hagel said that the formation of a new and inclusive government in Iraq was a key part of the strategy.
To be effective, the new international coalition “must coordinate across multiple lines of efforts”, said Mr Hagel.
These include providing military support to Iraq, stopping the flow of foreign fighters into the Levant, countering militant’s financing and funding, addressing humanitarian crises and de-legitimising the ideology.
The coalition was formed at a meeting on the sidelines of the Nato summit conference in Wales on Friday.
Diplomats and defence officials from the United States, Britain, France, Australia, Canada, Germany, Turkey, Italy, Poland and Denmark participated in the meeting.
The coalition will also enlist regional countries — such as Saudi Arabia, Bahrain and UAE — and will work to bolster airstrikes on militants. The objective is to destroy the group, not to contain it.
There was no containment policy, said Secretary Kerry. “Leaving them in some capacity intact anywhere would leave a cancer in place that will ultimately come back to haunt us.”
But, Secretary Kerry said, the allies would not send their troops into the region to fight terrorists.
“That’s a red line for everybody here: no boots on the ground,” Mr Kerry said.
The coalition, however, will not coordinate its strategy with the Syrian government, as demanded by the latter.
The coalition will also try to strengthen moderate rebels in Syria to counter the IS. President Obama has set aside $500 million to train and support the moderates