Islamic State's loss of Ramadi to Iraqi forces is a "significant blow" to the extremists, Philip Hammond said as he hailed the "key role" played by the RAF.
The jihadists were said by Iraqi generals to have been forced out of the centre and the local government headquarters in the city west of Baghdad, the loss of which in July was a severe blow to Baghdad.
Pockets of fighters for IS - also known as Isis, Isil and Daesh - remain dug in in other sectors, however.
The successful push, which followed several failed efforts to retake the city, was helped by "high-intensity" support from RAF air strikes and reconnaissance over the Christmas period.
Mr Hammond said: "This is the latest in a series of significant losses for Daesh. These barbaric terrorists have lost 30% of the territory they once held in Iraq.
"They have been driven out of cities across the country by Iraqi forces, with support from the UK and the global coalition.
"The Royal Air Force's close air support operations around Ramadi in recent days have played a key role.
"We will continue to support the government of Iraq as it re-establishes the security, governance and services the people of Ramadi will need as they return to their city.
"This remains a long fight but the coalition's strategy is succeeding. We will continue to stand with the Iraqi people until Daesh is defeated."