Prime Minister Malcolm Turnbull has called for a test of just how well emergency services and police would respond to a major terrorist attack.
In his national security statement to parliament on Tuesday, he said he had asked law enforcement agencies to test their responses to a mass casualty attack.
No details or timing of the exercise have been released.
However, the Paris attack unfolded and was concluded within three hours, leaving 130 dead.
"Such an attack leaves little if any room for negotiation," he said.
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Mr Turnbull said he would continue discussions on December 11 with premiers and chief ministers at the Council of Australian Government meeting on how best to counter violent extremism.
He said he would raise initiatives under consideration to address the problem of radicalisation in prisons.
Mr Turnbull said Australia had some natural advantages over Europe, including control of borders and restrictive gun laws but the risk of terror attack could not be eliminated entirely.
"But we can mitigate it. We will continue to thwart and frustrate many attacks before they occur," he said.
Mr Turnbull said the government was closely examining implications of the Paris attacks for domestic arrangements.
The Australian Security Intelligence Organisation and Australian Federal Police had advised that there was no evidence that recent attacks including Paris would affect the threat level in Australia.
"I am receiving updated intelligence on this every day. We are working more closely than ever with our European partners," he said.
One change to be rolled out soon will be the revised terror alert system, designed to provide better public information on the nature of the threat.
The current system has four levels - low, medium, high (the current level) and extreme.
The new system will have five levels - not expected, possible, probable, expected and certain.
