Gaming platforms and social media platforms will be monitored for extremist content as part of efforts to stop people being radicalised online.
The federal budget will include $74 million of funding for a national centre for online counter-terrorism work, to be jointly run by spy agency ASIO and federal police.
The program will have specialist counter-terror investigators and analysts monitor high-risk online spaces.
Home Affairs Minister Tony Burke said the measures would be able to counter growing online threats.
"This feature of young people being radicalised fast online is real and the agencies, as is evident in those those charges that have been brought to bear by the Australian Federal Police, have been acting on this," he told reporters in Canberra on Wednesday.
"Establishing the centre is the next logical step in being able to make sure that our agencies can work together, to be able to deal with a threat that is already there, that is continuing to emerge."
Spy agencies are increasingly concerned about young people being radicalised online - often targeted in seemingly innocuous spaces such as gaming platforms and chat groups.
Since laws cracking down on the distribution of extremist material online took effect in 2024, 27 people have been charged with offences.
Of those, 15 were aged 17 years or under.
ASIO director-general Mike Burgess said while Australia's terrorism level remained at probable, the threat of radicalisation online was growing.
"People who self-radicalise online often show few, if any, real-world indicators they're mobilising to violence," he said.
"Online operations are often the only way we can have identifying and engaging with these individuals, so we can understand their intent, their capability, their identity and their targets."
The funding is part of an $80 million package to be spent over two years, bolstering Australia's counter-terrorism threats and striving to prevent violent extremism and youth radicalisation.
The cash splash follows Australia's worst terrorist attack - the massacre of Jews celebrating Hanukkah at Bondi Beach on December 14, 2025.
The interim report of the Royal Commission into Anti-Semitism and Social Cohesion - announced after the mass shooting - recommended a review of Australia's counter-terrorism network, including its leadership structures, team integration, systems access and information-sharing arrangements.
