The US government will not prosecute families of Americans held hostage by terrorist groups if they choose to pay ransoms for their loved ones, President Barack Obama says.

He said the government will also assist them in communicating with the hostage takers.

"These families have already suffered enough and they should never feel ignored or victimised by their own government," Obama said at the White House on Wednesday in announcing the results of a review of US hostage policy.

He met earlier with family members of Americans who had been held hostage and then were killed by Islamic State extremists, and signed a directive ordering changes to the hostage policy to be more responsive to families.

The government began conducting the review last year after American hostages began being killed by Islamic State terrorists. The families expressed frustration in their dealings with government officials, prompting the review.

The US has been critical of the practice by European nations to pay ransoms to secure the release of their citizens held by Islamic State.

The government maintains its own policy not to pay ransoms. Obama said reconsidering that would endanger US citizens abroad.

However, he said the government was not prevented from communicating with hostage takers and could do so to protect families and to ensure they are not being defrauded.

US individuals who paid ransoms could in the past have faced prosecution under laws that forbid Americans from doing business with terrorist groups.

Obama warned terrorists who might take Americans hostage that "we do not forget. Our reach is long and justice will be done."

The Committee to Protect Journalists welcomed the changes and said they would improve the likelihood of a successful outcome. Two US journalists - James Foley and Stephen Sotloff - were killed by Islamic State last year.

More than 30 US citizens are currently being held hostage abroad, a presidential adviser told reporters after the announcement.