The federal government plans to tighten laws to stop up to 20 convicted terrorists from walking free from prison at the end of their sentences without any release conditions.
At present, convicted terrorists can only be kept in jail indefinitely if courts can prove there is a "high degree of probability" they will commit another serious crime.
If not, convicted terrorists would be released without any restrictions such as curfews or internet bans.
The Turnbull government wants to change this before the first high-risk terror offender becomes eligible for release in 2019, The Daily Telegraph reported on Wednesday.
New laws for an Extended Supervision Order scheme are expected to be introduced to federal parliament by the end of the year.
Acting Attorney General Greg Hunt. Source: AAP
"The purpose of the ESO scheme ... would be to streamline the continuing detention order and the control order regimes," Acting Attorney-General Greg Hunt told the Telegraph.
While the identities of the terrorists ready to be released are being withheld by the NSW government, terror plot leader Abdul Nacer Benbrika is believed to be among them.
Benbrika was denied parole last year and his 15-year sentence is set to expire in 2020.