The army will be given new powers to respond to unfolding terrorist attacks, but the Federal Government says state police will still be the first responders.
Prime Minister Malcolm Turnbull says most terrorist attacks are sudden and quickly finished.
"In the current threat environment, it's most likely that a terrorist attack will use simple methodologies -- a knife, a gun, a vehicle -- and the attack itself could be over in minutes."
But for attacks that go on for longer, particularly hostage situations, the Federal Government is giving the military new powers to intervene and help the police respond.
The Defence Act will be changed to remove a rule that says the states cannot ask the military for help until their own capabilities have been exceeded.
Mr Turnbull says Australian Defence Force officers will be embedded inside police counterterrorism units to improve cooperation.
"(It is) vitally important that we have that close liaison. It is no point operating in silos. Our enemies aren't. We have to be completely connected at all times. And we're clarifying the ability of the ADF to pre-position both personnel and material to fortify and enable the quickest possible response."
The special forces will also offer training to police-response units.
But Justice Minister Michael Keenan says state police will still take the lead in terrorism incidents.
"It's very important that everyone understands that domestic counterterrorism response remains primarily the responsibility of our police forces, but there will be certain circumstances -- and we can't always know exactly what form a terrorist attack might take in Australia -- there will be certain circumstances where the ADF might be useful. When that is the case, I think Australians would understand we need arrangements that are going to allow that to happen."
Labor has confirmed it is likely to support the reforms.
Opposition defence spokesman Richard Marles has promised a bipartisan approach, as is the norm with national-security issues.
"We have not yet seen the specifics of the legislation which is being proposed. We've asked that of the Government. But we will work with the Government to ensure that we come up with a bipartisan position for our country to deal with the threats that we face. And, indeed, I'd point out that, for more than a year now, Labor has been raising the question as to whether or not the call-out provisions have been strong enough to deal with the various terrorism threats that our country faces."
The Government is not stopping there and plans to work with the states on further law changes.
Malcolm Turnbull says he wants to make sure prison sentences are high enough and ensure terrorism suspects can be detained without charge in any state.
The states will also be asked to give police more legal protection so they feel empowered to shoot and kill attackers.
The Australian Strategic Policy Institute's Peter Jennings says police culture has already shifted away from prioritising arrests since the Lindt cafe siege in Sydney.
"Increasingly, because of what they call this active-shooter problem, police are basically training to kill terrorists on the spot. And in that sense, on that particular area, their culture is becoming more like the military culture."
