Australian Prime Minister Tony Abbott warned Monday of a long-term era of heightened threats from "home-grown" extremists as he announced fresh measures to combat the issue including revoking citizenship for dual-nationals linked to terrorism.

Canberra raised its threat level to high in September and has since carried out a series of raids with the departure of at least 110 of its nationals to Iraq and Syria to fight with the Islamic State group.

Abbott said the threat at home was getting worse with security agencies currently running more than 400 high-priority counter-terrorism investigations -- more than double the number a year ago.

"By any measure, the threat to Australia is worsening," he said in a national security address while releasing a counter-terrorism review he commissioned last year.

"The number of foreign fighters is up. The number of known sympathisers and supporters of extremism is up. The number of potential home grown terrorists is rising.

"In proclaiming a caliphate, the Islamist death-cult (Islamic State) has declared war on the world."

In his address Abbott highlighted the rise of lone-wolf attackers who "self-radicalise" online with Islamic State running a slick social media operation, with 20 people arrested under terrorism laws in the past six months alone.

Earlier this month, two men were charged after police thwarted an "imminent" attack, seizing an Islamic State flag, a machete and an Arabic-language video detailing the alleged plot.

"Even if the flow of foreign fighters to Syria and Iraq stopped today, there's an Australian cohort of hardened jihadists who are intent on radicalising and influencing others," said Abbott. "The signs are ominous."

Canberra pumped Aus$630 million (US$493 million) into a range of counter-terror measures last August but Abbott said more needed to be done, as he announced a new counter-terrorism czar to strengthen coordination between security agencies.

"The review finds that we face a new, long-term era of heightened terrorism threat, with a much more significant 'home grown' element," he said.

Abbott flagged changes to immigration laws to enable the government to revoke or suspend Australian citizenship in the case of dual nationals while clamping down on organisations that incite religious or racial hatred

"We cannot allow bad people to use our good nature against us," he said.

"The government will develop amendments to the Australian Citizenship Act so that we can revoke or suspend Australian citizenship in the case of dual nationals.

"For Australian nationals, we are examining suspending some of the privileges of citizenship for individuals involved in terrorism."

The changes could include restricting the ability to leave or return to Australia, access to consular services overseas and access to welfare payments.

The strategy follows a review released Sunday into last December's Sydney cafe siege in which Iranian-born self-styled cleric Man Haron Monis took 17 people hostage.

It found the decisions of government agencies which dealt with Monis were "reasonable" while acknowledging that the community felt let down by the system.