Terror suspects as young as 14 could be locked up for up to two weeks without charge as Victoria deals with the fallout from the Brighton siege.
Terrorist Yacqub Khayre, 29, killed one man and injured three police officers in Brighton on June 5, telling a TV station he was doing it for Islamic State and al-Qaeda.
Premier Daniel Andrews said he had spoken to police about the "gaps" in dealing with teen terror suspects who pose an unacceptable risk.
"Now it is time to look at additional powers. We will make changes that will not be universally popular because it is our judgement that is what is needed," he told reporters on Tuesday.
"We will have proper oversight. It will be a responsible package of measures and we will have more to say on that soon.
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The proposal follows similar laws to those introduced in NSW in 2016, which the Islamic Council of Victoria slammed in a submission to the parliamentary inquiry into religious freedom in May.
The council has already warned against locking up radicalised youths, saying it has a dampening effect on Australian Muslims' freedom of religion."
The ICV, which did not respond to AAP's requests for comment on Tuesday, says Muslim communities "shoulder a heavier burden of proof and endure more intrusion than others".
"While only a few children might come under the spotlight, the damage the legislation will do is enormous to the multicultural and multi-faith communities," its May submission reads.
Opposition Leader Matthew Guy said he supported the proposed changes to the law to manage security and safety, and called for a policy of mandatory sentencing and bail reform.
