Prime Minister Scott Morrison says security and intelligence agencies are certain "the threat from foreign interference has never been greater" in Australia.
The federal government will spend almost $90 million establishing a new counter foreign interference task force which aims to catch and then take to court anyone working to undermine Australia's national interests.
The task force will include staff from domestic spy agency ASIO, the Australian Federal Police, financial intelligence unit Austrac, foreign signals intelligence agency ASD and imagery intelligence organisation AGO.
"This task force to counter foreign interference is about identifying it, disrupting it and prosecuting," Prime Minister Scott Morrison told reporters in Canberra on Monday.
The announcement comes a week after the Nine Network reported Chinese operatives offered $1 million to fund Liberal Party member Nick Zhao's tilt at the federal seat of Chisholm.
The 32-year-old was found dead in a Melbourne hotel room after reportedly approaching ASIO to discuss the plot.
Chisholm was subsequently won by Gladys Liu who faced scrutiny earlier this year over her links to Chinese Communist Party propaganda groups.
It was also reported last week that a Chinese defector provided ASIO with details of how Beijing military intelligence officers fund and conduct political interference operations in Australia.
The new counter foreign interference task force - which will be supported by the Office of National Intelligence - will focus on arrests and prosecutions.
The task force will strengthen the ability of intelligence agencies to analyse disinformation activities targeting democratic processes and elections around the world.