According to new measures announced on Monday by Malcolm Turnbull, Australia's prime minister, state and territory governments would be able to call for military help any time a "terror incident" is declared.
Australia has seen several Islamist-inspired attacks over the past years, prompting a review of how police and authorities can respond better.
The changes will include the removal of the provision that now limits states and territories from asking for ADF support and specialist military skills until their capability or capacity has been exceeded.
And State governments faced with terrorists who take hostages would be able to call on special forces units such as the Special Air Service Regiment immediately under the changes, introduced partly in response to criticism of the way NSW police handled the Lindt cafe siege in December 2014.
The measures - including specialised training by special forces for law enforcement teams - will provide more Commonwealth support to state police forces, which are still acknowledged as the appropriate "first responders".
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Today's announcement means Defence special forces can offer special training for police officers.
The Defence Act will be strengthened to remove some constraints governing the "call-out" of the ADF in terrorist situations.
"We can not afford to take a "set and forget" mentality on national security", Mr Turnbull said.
The military will also be allowed on the streets to support the wider police response, including blocking potential suspects from leaving the scene.
Defence Industry Minister Christopher Pyne refused to be drawn on what might have happened if the changes were in place before Sydney's Lindt cafe siege which resulted in the deaths of two hostages.
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Turnbull said that the reforms were triggered in large part as a result of the "changing nature of the (terror) threat as demonstrated in recent terrorist attacks around the world".
The new engagement rules will be announced by Mr Turnbull in Sydney this morning, and include ways of improving law enforcement agencies' response to terrorist attacks.
The proposed changes need parliament's approval.
In a joint statement released with Defence Minister Marise Payne, Turnbull said that while elite special forces will be given greater powers in the event of domestic terror-related incidents, police will continue to play a leading role in the overall response.
"In the current threat environment, it is most likely that a terrorist attack will use simple methodologies - a knife, a gun, a vehicle and the attack itself could be over in minutes", Mr Turnbull said.
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