Khaled Sharrouf photo: Grandfather of boy holding severed head 'gutted' by photo

The Sydney grandfather of a 7-year-old boy pictured clutching the severed head of a Syrian soldier has urged the Australian government to bring the boy home, newspapers reported Tuesday.

Truck driver Peter Nettleton told The Australian newspaper that he was "gutted" to see on its front page on Monday a photograph of his grandson lifting the head with both hands by the hair.

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The newspaper reported that the image was taken in the northern Syrian city of Raqqa and posted on Twitter by the boy's convicted terrorist father, Khaled Sharrouf.

Nettleton, father of Sharrouf's Anglo-Australian wife Tara Nettleton, told The Daily Telegraph newspaper he had thought his five grandchildren had been living in Malaysia while Sharrouf fought with the Islamic State army in Syria and Iraq.

"I'm scared for the children," Peter Nettleton told the newspaper. "What life are they going to have now?"

"Can't the government do something to pull these kids away from that man?" he asked.

Nettleton could not be immediately contacted for comment Tuesday.

Estranged daughter

Sharrouf, 33, also posted a photograph of his three sons posing with him in matching camouflage fatigues and armed with assault rifles and a pistol with an Islamic State flag as their backdrop. He also has two daughters, The Daily Telegraph reported.

Nettleton said he became estranged from his daughter nine years ago after she converted to Islam and married her teenage sweetheart, an Australian born to Lebanese immigrants.

Australia's Foreign Minister Julie Bishop told Australian Broadcasting Corp. that the family could face legal action if they returned to Australia. She did not say whether her government would make an effort to secure the children's return.

"This imagery, it's shocking and it underlines what we've been saying about this threat to Australia and Australians from violent extremism," she told ABC.

She later told reporters in Sydney that jihadists whose "barbaric ideology" threaten Australia's way of life will be a focus of annual bilateral security talks on Tuesday with U.S. Secretary of State John Kerry and U.S. Defense Secretary Chuck Hagel.

Convicted on terrorism charges

Sharrouf used his brother's passport to leave Australia last year. The Australian government had banned him from leaving the country because of the terrorism threat he posed.

Bishop was asked but failed to explain how his wife and children came to be allowed to leave the country.

Sharrouf was among nine Muslim men accused in 2007 of stockpiling bomb-making materials and plotting terrorist attacks in Australia's largest cities, Sydney and Melbourne.

He pleaded guilty to terrorism offences and was sentenced in 2009 to four years in prison.

Australian police announced last month that they had arrest warrants for Sharrouf and his companion Mohamed Elomar, another former Sydney resident, for "terrorism-related activity."

They will be arrested if they return to Australia.

The warrants followed photographs being posted on Sharrouf's Twitter account showing Elomar smiling and holding the severed heads of two Syrian soldiers.

In June, The Australian newspaper published a photograph of Sharrouf posing among the bodies of massacred Iraqis.