The federal government has dismissed as "ludicrous" suggestions the defence force should march in and take control of responses to terrorist incidents like the deadly Lindt Cafe siege.
As the government waits for a review of defence "call out" powers, Justice Minister Michael Keenan insists there needs to be maximum flexibility and cooperation between state and federal authorities.
"The idea that the commonwealth just marches in without the cooperation of the local police force would be ludicrous," he told ABC radio on Thursday - a day after the findings of a coronial inquest into the 2014 siege in Sydney's CBD.
Coroner Michael Barnes branded as "simplistic and unrealistic" suggestions Defence's special forces should have been called into end the siege.
The requisite conditions did not exist for military intervention, largely because NSW Police believed it had the matter in hand, he said.
The ADF could only intervene and "assume responsibility for such an incident if, on application for assistance from a state or territory, the commonwealth is satisfied that the state or territory's police force is unable to mount an adequate response".
But Mr Barnes did recommend the Commonwealth consider changing the rules to make it easier for the defence force to take charge during terror incidents.
Attorney-General George Brandis says there will be circumstances where police call on the defence force.
"Plainly there is an argument, particularly when there is a serious terrorist event, to deploy all of the capabilities the nation can summon, whether it be the policing intelligence capability or the military capability," he said.
There would be cases in which Defence provided the operational commander on the ground with capabilities unavailable to police.
The Labor opposition says it will work with the government in implementing the report's findings.
Asked about a letter he received from the gunman in October 2014, which was not passed on to ASIO at the time, Senator Brandis said he would have preferred it to have been given to security agencies and if a similar letter was received today it would be.
Shadow attorney-general Mark Dreyfus said the admission was welcome.
"Senator Brandis has assured that significant process changes have since been made, and Labor will seek to confirm this with ASIO at Senate hearings tonight" Mr Dreyfus told AAP.