A special investigator will be appointed to assess potential war crimes charges stemming from allegations against Australian special forces in Afghanistan.
Prime Minister Scott Morrison said a redacted version of the report into the allegations, which was handed to Defence Force Chief Angus Campbell on Friday, would be released next week.
A separate panel will oversee the Australian Defence Force's broader response to the inquiry.
Major General Paul Brereton, who is also a NSW Supreme Court judge, examined the substance of rumours and allegations relating to possible war crimes breaches in Afghanistan from 2005 to 2016.
Mr Morrison said there was disturbing conduct in the report.
"This will be difficult and hard news for Australians, I can assure you," he told reporters in Canberra on Thursday.
The office of the special investigator will look at criminal matters raised in the report, gather evidence and potentially refer briefs to the Commonwealth Director of Public Prosecutions.
It will be led by either a senior counsel or retired judge with experience in international law.
Mr Morrison believes potential prosecutions will mitigate against the possibility of Australian soldiers being called before the International Criminal Court.
"We need to deal with this as Australians, according to our own laws, through our own justice processes and we will," he said.
"I think that will say a lot about Australia."
The office will be staffed with investigators from the Australian Federal Police, state police experts and legal counsel.
The oversight panel will be led by former intelligence watchdog Vivienne Thom.
University of Tasmania vice-chancellor Rufus Black and ex-attorney general's department boss Robert Cornall will also be on the panel.
It will advise the government on cultural, organisational and leadership issues in Defence linked to the allegations.
"Its role will be the essential part of ensuring ongoing confidence in our defence force," Mr Morrison said.
The Brereton inquiry examined 55 separate issues and 338 witnesses, mainly over alleged unlawful killings and cruel treatment.
In March, the ABC aired footage from a helmet camera showing an Australian soldier shooting dead an apparently unarmed Afghan man in a field in May 2012.
A former SAS soldier has also told the broadcaster he saw three incidents of alleged murder.
There have been a range of similar allegations levelled at the special forces unit.