Two million people were freed from Islamic State rule in 2016, the Defence Secretary has said.
The city of Mosul, Islamic State’s last stronghold in Iraq, is expected to fall to local forces this year.
US-backed militias from the Syrian Democratic Forces are also encircling the city of Raqqa, which is Islamic State’s de-facto capital.
Estimates suggest that about 25,000 IS fighters were killed over the course of 2016, and the group is now in control of less than 10% of Iraqi territory.
Officials say IS fighters have become increasingly disorganised recently – with militants resorting to desperate tactics such as hiding in hospitals, and burning alive civilians who are caught attempting to flee the areas under their control.
The RAF is continuing to carry out operations to support ground forces in Iraq and Syria.
According to the Ministry of Defence, British warplanes and drones conducted nearly 1,200 strikes in 2016 – and this amounts to the most intense and sustained pace of operations since the Gulf War 25 years ago.
Sir Michael said: “Britain is stepping up in the fight against Daesh: the Army has helped train over 32,000 Iraqi forces and in a controlled and precise manner, the RAF is taking out Daesh and working hard to minimise casualties in a very difficult, dense urban environment.
Working with allies we will keep momentum, push Daesh out of Mosul, encircle Raqqa and eventually end Daesh’s reign of terror.