Critics say the second phase of the Government's anti-terror measures could endanger personal liberties and freedom of speech.
The next phase, which includes the Foreign Fighters Bill, is due before Parliament this month.
Prime Minister Tony Abbott has warned the balance between freedom and security will have to shift after Australian support for Islamic militants prompted the most substantial changes to the country's anti-terror operations in a decade.
The first phase of the Government's national security crackdown is already law, including tough restrictions on media reporting of special intelligence operations.
The Foreign Fighters Bill is aimed at disrupting radicals and their supporters, using measures that include making it an offence to travel to a terrorist zone without a valid reason, and streamlining passport cancellations.
It will also be made an offence to "advocate terrorism" with offenders facing five years in jail if they "counsel, promote, encourage or urge the doing of a terrorist act".
Former member of New Scotland Yard's counter-terrorism division Nick O'Brien said the new offence would help police respond faster to the home-grown threat.
"The greatest threat to Australia comes from people returning from Iraq and Syria," Mr O'Brien said.
"Police could now act when people start advocating terrorism. They couldn't do this before, they couldn't act then."
But critics say the offence is too broad, with more than 40 legal, human rights, and community groups uniting to oppose it.
Kieran Hardy from the University of New South Wales said the current offence of inciting terrorism was enough and the inclusion of "advocating terrorism" could hamper freedom of speech.
"I think there is this real risk of a chilling effect where people won't want to contribute to public debate," Mr Hardy said.
He also raised concerns that an offence could be triggered, even when a person does not intend that someone else would then carry out a terror attack.
"Ordinarily with incitement you would have to intend somebody to commit an act as a result of the statement that you made, whereas this idea of being reckless as to whether somebody might act in such a way, that would include posting statements online, being reckless as to whether somebody might act on those statements," Mr Hardy said.
Lydia Shelly from the Muslim Legal Network said in another era, these proposed laws would have acted against causes that are now accepted.
"It would essentially criminalise support for the African National Congress, so it would essentially criminalise support for Nelson Mandela. It would essentially criminalise supporting the resistance shown to the occupation by Indonesia in East Timor," Ms Shelly said.
Mr O'Brien agreed the advocating provision should be used sparingly and wants the Director of Public Prosecutions to be able to intervene.
"There is a danger that people that are talking in a coffee shop, for example, who actually don't mean... they don't intend that people go over and commit acts of terrorism, that they could be caught under this legislation and that's why I think we need an extra safeguard to stop that happening," he said.
The Joint Committee on Intelligence and Security has been assessing the bill and is due to deliver its recommendations on Friday.