CANBERRA, July 18 AAP - Prime Minister Malcolm Turnbull has created a new super ministry to manage national security to be overseen by Peter Dutton.
The measure is part of the most significant reform to national intelligence and domestic security arrangements in more than 40 years.
"When it comes to our nation's security, we must stay ahead of the threats against us," Mr Turnbull told reporters in Canberra on Tuesday.
The new Home Affairs portfolio is modelled on the UK's Home Office, but not the Department of Homeland Security in the US.
Each agency under the new ministry umbrella will retain their statutory independence.
They include domestic spy agency ASIO, the Australian Federal Police, the Australian Border Force and the Australian Criminal Intelligence Commission.
Mr Dutton, who holds the immigration and border protection portfolio, will oversee the new ministry and be assisted by Attorney-General George Brandis and Justice Minister Michael Keenan.
The transition will be managed by a taskforce and be completed by mid-2018.
Mr Turnbull says the changes follow a review of Australia's intelligence community by Michael L'Estrange, a former head of the foreign affairs department.
But he conceded a home affairs ministry wasn't a specific recommendation as the idea wasn't within the review's remit.
"This is my decision," the prime minister said, rejecting claims the announcement was about politics and insisting it was driven by operational logic.
"We need these reforms, not because the system is broken, but because our security environment is evolving quickly," he said.
Addressing civil liberties critics, Mr Turnbull said he was determined to see stronger oversights under the new arrangements.
The Australian Signals Directorate, defence's intelligence agency, will become a statutory authority.
Cyber security arrangements will be bolstered with Mr Turnbull's cyber security special advisor to head the Australian Cyber Security Centre.
Labor will be briefed on the L'Estrange review and the government's announcements.