The Australian government says the threat to the country from home-grown terrorists can no longer be ignored.
The risk has been spelled out in a counter-terrorism white paper, which was released on Tuesday by Prime Minister Kevin Rudd at Parliament House in Canberra
The document names overseas groups including al Qaeda and the growing number of Australians with extremist views as the two major terrorist threats to Australia, the ABC reports.
Mr Rudd says the danger of an attack is persistent and real.
"Homegrown terrorism is now a reality in Australia that we have to accept. That threat is not diminishing. The key threat comes from people who adhere to the distorted and militant interpretation of Islam that is espoused by such groups as Al Qaeda.
"Australia now faces an increased terrorist threat from people born or raised in Australia who take inspiration from international jihadist narratives."
A new counter-terrorism control centre will be set up to coordinate intelligence gathering and analysis.
The govenment says it will work with countries to increase the screening of visa applicants from 10 as yet unnamed countries.