WASHINGTON (Reuters) - Five U.S. special operations members were wounded while working with Afghan special forces in an operation to clear areas controlled by Islamic State in eastern Afghanistan, the top U.S. military commander in Afghanistan said on Thursday.

Army General John Nicholson said two of the injured service members have returned to duty, while three others were evacuated but are "in good spirits" and are expected to make a full recovery, he said.

"None of these are life-threatening injuries," Nicholson said in a briefing with reporters on Thursday. Their wounds were sustained from small arms fire and shrapnel, he added.

"We will continue to stay after Daesh until they are defeated here in Afghanistan," Nicholson said, using an Arabic acronym for Islamic State.

A Pentagon spokesman said one service member was injured on Sunday, while the other four were injured on Monday.

President Barack Obama in January gave U.S. commanders broader authority to target Islamic State fighters in Afghanistan. Since that time, the territory controlled by the militant group has shrunk from about 10 districts in the southern part of Nangarhar province to parts of three or four districts, Nicholson said.

Also since that time, the number of Islamic State fighters has shrunk from 3,000 in January to 1,000 to 1,500 now, he said.

Most of Islamic State's fighters in Afghanistan previously fought for the Pakistani Taliban, or TTP, Nicholson said, and come from Orakzai Agency in Pakistan near the Afghan border.

"They were former members of the TTP, complete with their leadership, who wholesale joined Islamic State ... earlier this year," Nicholson said. "Seventy percent, roughly, of those fighters are from the TTP, and many of them are Pakistani Pashtun from the Orakzai Agency."

Other Islamic State members in Afghanistan were originally part of the Islamic Movement of Uzbekistan, another militant group, he said.

Last week more than 80 people were killed in a suicide attack in Kabul targeting Afghanistan's Hazara minority. The attack on Saturday, against a demonstration by the mainly Shi'ite Hazara, was among the worst in Afghanistan since the fall of the former Taliban regime in 2001, and was claimed by Islamic State.

Nicholson compared the bombing to recent attacks claimed by Islamic State in Europe and the United States, and emphasized that their footprint in Afghanistan was shrinking.

"The fact that they could conduct a high-profile attack should not be perceived as a sign of growing strength," he said.

(Reporting by Idrees Ali and Yeganeh Torbati; Editing by Bernard Orr and Jonathan Oatis)