Tony Abbott wants the nation's leaders to urgently consider using the military in complex terrorist situations while giving police the shoot-to-kill powers utilised in the London terror attack.
The former prime minister, who put a commando regiment on standby during the December 2014 Lindt cafe siege, is one of several government MPs pushing for the Defence Act to be amended.
"If there is a complex situation, I think it is fitting the military become the lead agency," Mr Abbott told reporters in Ballarat on Monday, while acknowledging police would always be the initial responders.
He said the issue should be urgently talked about at the next COAG meeting, scheduled for Friday in Hobart.
Mr Abbott also urged leaders not to show any spirit of surrender or defeatism in the face of terrorism.
Instead the strongest possible response was needed.
"All too often in officialdom's ranks there is this notion Islamophobia is almost as bigger problem as Islamist terrorism," he said.
"Islamophobia hasn't killed anyone, Islamist terrorism has now killed tens of thousands of people."
Liberal senator David Fawcett, chairman of parliament's joint foreign affairs and defence committee, would like the military to be the primary responder in a terrorist incident.
"If a 'high-risk incident' develops into a siege or hostage event, the force best equipped to deal with the threat must be deployed in a timely manner," he wrote in the paper.
The existing law, which requires a state or territory government to request assistance, unnecessarily delays deployment of the most effective force to deal with the threat, he said.
Foreign Minister Julie Bishop said the idea was already under review following the Lindt cafe siege.
"The issue of defence support in national counter-terrorism arrangements is already being considered," she told ABC radio.
