The palace in the IS stronghold of Mosul in northern Iraq was attacked in a joint operation by the US-led coalition on Monday, with British Tornado jets targeting the headquarters buildings and a security centre.
Extensive surveillance established that the IS group, also known as Daesh, was using the palace and its sprawling grounds as a headquarters and training centre for foreign recruits, the ministry said.
Within the secure compound on the banks of the River Tigris, the main palace building was being used as accommodation and a meeting venue.
The site also contained "a number of more discreet outbuildings used for command and control, training, internal security and repression", it said.
"A large coalition air package drawn from several nations conducted a carefully coordinated attack on the complex," the ministry said in a statement.
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"The British contribution was a pair of Tornados, armed with the largest guided bombs in the RAF's (Royal Air Force's) inventory, the 2,000-pound (910-kilogramme) Enhanced Paveway III, which were used to target first the headquarters buildings, then a security centre.
"Initial analysis indicates that the coalition mission was successful."
Mosul, Iraq's second city, has been held by the IS group since June 2014. Iraqi forces are conducting operations to set the stage for an assault but the final push to retake it is likely still months away.
As part of the international coalition, RAF Tornado and Typhoon jets are flying daily missions against IS in Iraq as well as in Syria from the British sovereign bases on Cyprus.
"Daesh has been losing followers and territory for months, and emphatic strikes like this show that we and the coalition will not waver," Defence Secretary Michael Fallon said after the Mosul bombing.
"Daesh fighters, both foreign and home-grown, can see that they are targets inside this cult."