The government-proposed changes to national security laws are part of a review into counter-terrorism.
The new measures would mean the Australian Defence Force (ADF) could be called in sooner to help police deal with threats.
They were prompted by criticism of the speed with which police responded to the 2014 siege in a cafe in Sydney.
Current legislation prevents police from calling on the ADF until they have reached the limit of their capability or capacity.
Under the new measures, the military would also provide specialised training to police forces.
At a press conference, Australian Prime Minister Malcolm Turnbull said he was "taking a lot of the red tape and the gum out of the works to enable the cooperation between the police and the ADF".
Two hostages and the lone gunman died in the Sydney siege and earlier this year a coroner said that the authorities had been too slow to respond
How the Sydney siege unfolded
Australia has seen several Islamist-inspired attacks over the past years, prompting a review of how police and authorities can respond better.
In the most recent case, a terrorist holding a hostage in Melbourne was killed by police last month.
The Australian military is to be given broad new powers to respond to domestic terrorist attacks.