A dedicated cyber warfare unit will focus on protecting Australian military assets, while the Australian Signals Directorate will be given new powers to hack criminal networks overseas.
A new information warfare division will be created within the Australian Defence Force to run both offensive and defensive cyber warfare operations, the Turnbull Government has announced.
The government's cyber security minister, Dan Tehan, said the new unit would help the ADF keep pace with modern security threats, as foreign powers like the US, Russia and China escalate their investment in digital forms of war.
The unit will be active from tomorrow and will pull together existing cyber capabilities from across the Defence Force.
"The division will have the responsibility for military cyber operations, military intelligence, joint electronic warfare, information operations and our military's space operations,” Mr Tehan said.
“It will integrate existing operations from across our defence forces to protect and support our ADF deployed personnel and systems."
The government will use part of the $400 million set aside in last year's Defence White Paper to hire cyber specialists.
ASD given powers to launch cyber-attacks on criminals
The Australian Signals Directorate, which is in charge of the country's digital intelligence, will be given expanded powers to target criminals overseas.
The Turnbull Government announced the cyber security changes following the recent WannaCry and Petya global ransomware attacks, which affected computer systems around the world, including in Australia.
The intelligence agency had previously only used offensive cyber attacks to disrupt the activities of the Islamic State group.
"Our response to criminal cyber threats should not just be defensive. We must take the fight to the criminals," Prime Minister Malcolm Turnbull told The Australian.
Labor leader Bill Shorten said he supported the cyber security push, warning 'soft targets' needed protection too.
"Some of our enemies who would do Australia harm, they might not necessarily do cyber warfare against the big banks who've got strengthened facilities or against our military establishment," Mr Shorten said.
"But the criminals and those who would wish us harm might chase what they see as soft targets. I am talking about small and medium enterprises, I'm talking about the data privacy in our hospital system."
Cyber crime is estimated to cost the Australian economy $1 billion a year, according to a government media release.