A potential terrorist threat to the nation's federal parliament was identified about a week ago, prompting an urgent security review.
Prime Minister Tony Abbott confirmed the threat, which came before counter-terrorism raids in NSW and Queensland on Thursday.
Australian Federal Police will now take over security both inside and outside the 250,000 square metre building in Canberra. The security is now conducted by Australian Parliamentary Services, a government agency.
"It is happening almost immediately," Mr Abbott told Nine Network on Friday.
About 5000 people work in Parliament House when it sits and it's a major attraction for tourists and visiting school children.
Attorney-General George Brandis said the government would protect "the iconic heart of our democratic system".
AFP and state police on Thursday conducted counter-terrorism raids in Sydney and Brisbane and arrested 15 people amid concerns Australian citizens could be at risk of being abducted and executed by supporters of Islamic State extremists.
Two people have already faced court while others have been released while investigations continue.
Hundreds of people marched through the western Sydney suburb of Lakemba on Thursday night, claiming police were terrorising innocent people.
The prime minister said the demonstration was small and did not reflect the wider community view, and that the raids were about crime, not religion.
"They were about potential terrorism and they were about keeping our whole community safe," he told the Seven Network.
However, Mr Abbott said there was one regrettable reality.
"To mount the kind of attacks ISIL in Syria and Iraq has in mind for Australia, all you need is a determined individual who will kill without compunction, a knife, an iPhone and a victim.
"So it is difficult to entirely protect the community from this kind of act."
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