Unprecedented threats of terrorism and foreign spies on Australia soil have sparked the biggest overhaul of security laws in 40 years.
Former intelligence chief Dennis Richardson will spend 18 months examining the mountain of national security and intelligence laws put in place in recent years.
"This will be the most comprehensive review of intelligence legislation in Australia since the royal commission on intelligence and security in the 1970s," Attorney-General Christian Porter said.
The coalition government has passed 10 tranches of laws to tackle the evolving threat of terrorism and an 11th tranche - modernising espionage offences and establishing new foreign interference offences - is before the parliament.
"We live in an age of unprecedented espionage and terrorism, and foreign interference and influence," Mr Porter told Sky News.
"The national security environment is constantly changing and it is essential that we ensure our agencies have the tools and framework they need to be effective and meet their core function - keeping Australians safe."
Mr Porter said the review would look at better integration, including whether information collected by an intelligence service could be shared with a frontline police officer to let them know a suspect could be armed.
Greens MP Adam Bandt said concerns already existed about Home Affairs Minister Peter Dutton's desire to expand the powers of Australian spy agencies to target crime domestically.
"I think Peter Dutton wants to do to Australian citizens what he's doing to asylum seekers and refugees," Mr Bandt said.
"Peter Dutton is engaging in a power grab on an unprecedented scale, and I think we should be very skeptical about passing laws through this parliament that give (him) and the government the capacity to spy on Australian citizens because I don't trust him to use it for good."
The review will consider the powers of agencies - such as ASIO, Home Affairs, Australian Federal Police, Austrac and the Australian Criminal Intelligence Commission - as well as protections and oversight.
Mr Richardson was director-general of ASIO from 1996 to 2005, Australia's ambassador to the United States from 2005-2010, secretary of the Department of Foreign Affairs and Trade from 2010-2012 and Defence Department boss from 2012 to 2017.