Prime Minister Malcolm Turnbull has declared Islamic State is being rolled back, losing territory, lives and its myth of invincibility.
Mr Turnbull says Australians fighting with the terror group now face "almost certain death".
"ISIL has not yet been defeated in Syria and Iraq but it is being rolled back," he told The Australian on Saturday.
"We have not just halted ISIL's momentum, it has been turned back.
"Far from sweeping across Europe to stable their horses in the Vatican, ISIL is now seen on the defensive, losing territory, resources and lives."
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Mr Turnbull says Islamic State has lost almost half the territory it held in Iraq and up to 20 per cent of its territory in Syria.
Its recent wave of attacks across Europe are an attempt to hide its losses, he says.
Mr Turnbull's comments come as attorneys-general across Australia on Friday agreed in principle to proposed draft laws which would keep high-risk terrorists locked up beyond their terms.
Under the measures, a Supreme Court judge must be satisfied there's a high degree of probability a person poses an "unacceptable risk" of committing a serious terrorism offence if released.
They'll stay locked up for a maximum of three years - but there's no limit on how many times their detention can be renewed.
Opposition Leader Bill Shorten on Saturday called for tougher parole processes for convicted terrorists as well.
He wants to create a new criminal class for terrorists before their sentences expire, including assessments by ASIO and deradicalisation experts, the Daily Telegraph reports.
He also wants family and friends of those convicted to be assessed to evaluate the environment terrorists could return to if released.
But legal experts have slammed the proposal to keep terrorists behind bars after serving their sentences.
Australian Lawyers Alliance spokesman Greg Barns said everyone in the justice system was entitled to be treated fairly.
The phenomenon of locking people up beyond their term of imprisonment originated in 1936 in Nazi Germany.
"That's the origins - that's not a tradition that this country ought to be following," he told Sky News.
Similar laws applying to sex offenders already exist in some states.
