Australia may have to consider offering training to Filippino soldiers to fight Islamic State militants - similar to the mentoring role it has in Iraq.
The Philippines defence force has been fighting Islamic State militants in Marawi city since May.
The conflict had displaced an estimated 400,000 people.
Australia has 300 defence personnel training Iraqi soldiers and police at Taji, and Australian Strategic Policy Institute director Peter Jennings says the program has had remarkable success.
"Something of that nature would be appropriate for the Philippines," Mr Jennings told the National Press Club in Canberra on Thursday.
"We could certainly equip them with the necessary skills to do a better job."
Australia has so far sent two P3 Orion reconnaissance and surveillance planes to assist the Philippines.
Security agencies estimate more than 750 South East Asians have joined terrorist groups in Syria and Iraq, including about 110 Australians.
As Australia grapples with the terror threat in its backyard, Mr Jennings argued there was a national security role for development too - a view World Vision spokesman Tim Costello echoed.
Australia has cut foreign assistance to the Philippines from more than $100 million a year to $67 million.
Mr Jennings said he thought the coalition government had made a "strategic mistake" by dramatically slashing the foreign aid budget by more than $11 billion since coming to power.
Aid spending now equates to about 22 cents in every $100 of gross national income, a historic low.
Mr Costello said one of the most effective tools for combating terrorism was building community confidence and nurturing young people to have a sense of opportunity and belonging.
World Vision's model was to spend 15 years in communities building relationships and trust, he said.
He said a military-heavy response to terrorism was short-sighted.
"Wars might disrupt some terrorist groups but they spawn many new ones," Mr Costello warned.
"The game of strategic denial we've seen turns into whack-a-mole, you knock them down in Afghanistan and they turn up in Somalia, Iraq, Nigeria and the Philippines."
