Prime Minister Tony Abbott said the new powers would apply to dual nationals who fight with or support jihadists such as Islamic State group or so-called lone wolves who pose a threat on home soil.
But the government backed away from removing citizenship from second-generation Australians. Under that scenario, such nationals linked to terror groups would have been forced to take on the citizenship of their parents' birth countries.
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"These new powers are a necessary and appropriate response to the terrorist threat. They modernise our laws and bring them closer to those of Britain, Canada, France, the United States and other countries."
The announcement came as a Sydney mother reportedly abandoned her two children and fled to Syria for a new life under Islamic State, becoming one of more than 100 Australians who have joined the jihadists. At least 30 have been killed.
The government said it was deeply disturbed by the revelations and was monitoring the situation closely.
The Sydney Daily Telegraph said Jasmina Milovanov, a 26-year-old Muslim convert, left her children, aged five and seven, with a babysitter earlier this month and never returned.
It cited her ex-husband as saying she sent a text message telling him she was in Syria.
"The only thing I can think about is my children. I can't believe she left these two beautiful children. My son was saying in the days afterwards that he hoped 'my mum is OK'," said the husband, who was not named.
"Before she (went) I talked to her (about her extreme Facebook posts). I said this is extreme, stupid. I was warning her about who she hangs out with."
Milovanov is Facebook friends with former Melbourne woman Zehra Duman, who is known in Australia as the "jihadi bride recruiter" and uses social media to entice women to join the militant group.
Friends of Milovanov, cited by the Telegraph, said she had often talked about marrying a jihadi fighter.
Australia raised its threat level to high last September and has since carried out a series of counter-terrorism raids, with several alleged plots foiled this year.
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