And he added the UK was offering help to alleviated "humanitarian suffering".
He said the majority of ISIS members were Iraqi or Syrian but "it also includes a significant number of foreign fighters among its ranks".
Mr Hague said: "We estimate the number of UK-linked individuals fighting in Syria to include approximately 400 British nationals and other UK linked individuals who could present a particular risk should they return to the UK, and some of these inevitably are fighting with ISIL (ISIS)."
He criticised Iraqi president Nouri al Maliki, who leads a Shia-dominated administration, of adopting a "sectarian rather than inclusive approach".
He said ISIS had taken advantage of "political disaffection" including among officers and soldiers from Saddam Hussein's era, and Sunni tribal fighters who had "lost trust" in the Baghdad government.
"Overcoming this will require a concerted political effort by the government", he said, including working with the administration in the semi-autonomous Kurdistan administration.
Meanwhile, footage has emerged which appears to show an ISIS fighter questioning and killing Iraqi soldiers in the country.
It comes after the insurgents, who have seized large swathes of territory in the past week, released graphic pictures purporting to show some of the 1,700 Shia soldiers they claim have shot dead near Tikrit.
According to a translation of the first clip, militants order their prisoners to chant the ISIS slogan "Baqiya", which is thought to mean "(ISIS) will remain in existence" or "Islamic state will stay".
When asked where the government forces are, a soldier replies they have left.
The fighters then threaten to chop off the head of one of the soldiers.