The head of a EU military task force in the Mediterranean Sea says Libya's coastal cities are generating up to 325 million euro in revenue each year from people smuggling.

Rear Adm Enrico Credendino cites the figure in a confidential report assessing the work of Operation Sophia, a naval mission intended to stop the flow of migrants to Europe.

The report, issued to EU member nations, provides no details on how the figure was calculated.

EU officials did not immediately respond to questions.

Mr Credendino describes the smuggling as a "major source of income among locals in Libyan coastal cities".

He also said Islamic extremist groups are "financially exploiting" smuggling routes that lead through Africa's Sahel region into Libya. 

"Al Qaida and al Qaida AQIM (al Qaida in the Islamic Maghreb), aligned with the Tuareg tribe in south western Libya, are assessed to be financially exploiting these smuggling routes," he said.

He added that there was no evidence extremists were trying to enter Europe via the dangerous Central Mediterranean route that passes from Libya to Italy.

The International Organisation for Migration estimates that 4,690 people have lost their lives this year trying to cross the Mediterranean into Europe.

Operation Sophia has recently begun training dozens of Libyan coast guards in the hope that they will be able to stop smugglers closer to Libya's coast, where the EU mission is unable to operate for legal reasons.

Mr Credendino said an effective Libyan coast guard would be able to save more lives.

"Putting an end to illegal activity could also allow more legitimate activities to take space," he said.

Libya's economy has suffered badly since the 2011 ouster of long-time dictator Muammar Gaddafi plunged the country into chaos.