Islamic State has taken control of 90 per cent of a Palestinian refugee camp on the outskirts of the capital Damascus.

The capture of the Yarmouk camp gives the jihadist group a foothold just a few kilometres from President Bashar al-Assad's seat of power.

"The situation in Yarmouk is an affront to the humanity of all of us, a source of universal shame," UN Relief and Works Agency (UNRWA) spokesman Chris Gunness said.

"Yarmouk is a test, a challenge for the international community. We must not fail. The credibility of the international system itself is at stake," he said.

The group has been battling other anti-Assad militia groups in the camp which is home to 18,000 civilians.

Before the Syrian civil war began in 2011, there were half a million Palestinian refugees in the camp.

The United Nations says it is extremely concerned about the safety of Syrians and Palestinians in the camp.