Prime Minister Malcolm Turnbull says the terror threat has grown and the new laws are needed to respond to the growing number and severity of attacks across the world.
It's a legislative path Australia has been down before.
Since the September 11 attacks of 2001, Australia has introduced more stringent anti-terror laws and it's on the verge of doing so again because the federal government says the terror threat has grown.
It wants to work with the states and territories to introduce laws which would see convicted terrorists kept in jail after their sentences have been completed if they're considered to still pose a risk to the community.
It's called post-sentence preventative detention and Prime Minister Malcolm Turnbull says it strikes the right balance.
"They balance the need to keep the community safe with our commitment to privacy and the rights of the individual. Now together, the measures we're announcing today are designed to deter terrorism, prevent it, ensure the nation and our people are kept safe and to provide reassurance that Australians can and should continue going about their daily lives and enjoying their freedom in the usual way because they should understand and recognize that the Australian government and its agencies are doing everything possible to keep them safe."
Attorney General George Brandis says the proposed laws provide an incentive for people to rehabilitate.
"It provides a very powerful incentive to people who may be in prison not to participate in further radicalisation, or not to renew their malevolent intent, but rather gives them an incentive to be genuinely rehabilitated because they face the risk that if they continue to demonstrate these intentions, they may very well find themselves the subject of an application for preventative post sentence detention."
Senator Brandis says there would be a number of safeguards in place with the process overseen by the courts and informed by detailed medical and psychological checks.
He will meet with state and territory attorneys-general in coming days to discuss the new laws.
Victoria's premier Daniel Andrews sees a need for the legislation.
"I've provided Victoria's in principle support. We will deliver on that important commitment that we gave because we do sadly, in these dangerous times, we do face some unreasonable risks."
Federal Labor says the new laws should only be used in the most extreme cases.
Mark Dreyfus is Labor's spokesman for legal affairs.
"It's important that an order that keeps someone that has served their sentence in detention be reserved for the most extreme cases and that would be where an unacceptably high ongoing risk is posed to the community and there has been no rehabilitation of the prisoner during his or her original sentence. Checks and balances on this new power are going to be crucial to prevent the possibility of legislative overreach or unjust deprivation of liberty."
The president of the Law Council of Australia, Stuark Clark, has told Sky News the rule of law must be upheld.
"What we believe is absolutely essential is that the case for detaining somebody be laid out before a judge, the person against whom against the case is being made is allowed to hear it and then answer it to argue as to why that order shouldn't be made, or to argue as to why they do not present the risk the government alleges. It may be that some of the evidence is classified or subject to some sort of confidentiality regime. In those circumstances there is a well-established procedure for having a special advocate - a security-cleared lawyer - who can deal with that aspect."
The preventative detention change would match similar laws already in place for sex offenders in some of the states.
The government has also announced it wants to extend control orders to juvenile offenders as young as 14, down from 16.
It will also introduce a new offence of advocacy of genocide.
