Ministers from both countries warned of the rising risk posed by the returning fighters who are radicalized and have developed sophisticated skills to carry out terror attacks.
"In this context of counter-terrorism and counter radicalisation... We felt that we could exchange more information because these threats if they materialize will affect all citizens of all races and all religions," Singapore Defence Minister Ng Eng Hen said at a joint press conference with Australian Foreign Minister Julie Bishop.
Bishop said Canberra is "also in discussions with our counterparts in Indonesia, Malaysia, and the Philippines as this is not an issue that is isolated".
"If these foreign fighters as they are called, come back to Australia, come back to our region, then they pose a threat," she said.
"They are hardened, experienced extremists who have undertaken in a number of instances, terrorist activities overseas," she added.
Australia's assistant Defence Minister Stuart Robert said the enhanced information sharing with Singapore will cover "the areas of terrorism, extremism, foreign fighters and the growth of homegrown extremism".
The group has overrun parts of Syria and Iraq and have declared a Muslim caliphate in those areas.
As many as 150 Australians are said to be fighting alongside the group overseas, including at least one Sydney man and his young son who have posed for photos with a severed head.
Prime Minister Tony Abbott's government is hardening laws to make it more difficult for citizens to travel from Australia to fight in the Middle East, and easier to arrest them on their return.
Authorities in October 2012 detained a man who attempted to travel to Syria to join the jihadists, while two others have had their movements restricted after their attempts to contact the militant groups.
Neighboring Malaysia has detained 19 Islamic State- inspired militants who had allegedly plotted to bomb pubs, discos and a Malaysian brewery of beer producer Carlsberg.
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