Australian spy agencies will undergo their largest review in decades, officials announced Wednesday, as Canberra seeks to strengthen intelligence powers amid heightened concerns about terrorism and foreign political interference.

A former head of the Australian Security Intelligence Organisation (ASIO) will spearhead the wide-ranging enquiry, which will look at how national and domestic intelligence agencies share information, their resources and the laws that underpin their work.

"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 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."

The enquiry is the latest in a string of reforms to espionage and foreign interference legislation Canberra announced last year, when it singled out China as a focus of concern.

The changes were prompted by an investigation by the Australian Broadcasting Corporation and Fairfax Media which claimed Chinese billionaires were using donations to gain access to Australian political parties.

The revelations have soured Canberra's relationship with Beijing, which has reacted furiously to allegations of interference suggesting Australia "take off its tinted glasses" if it wanted to improve relations.

In announcing the review Porter echoed recent comments by Australia's top spy chief Duncan Lewis.

"We have had the director general of ASIO put to a committee that we live in an age of unprecedented espionage and terrorism and foreign interference and influence," he told Sky News.

"Now is the time to have a top-to-tail review of all of the national intelligence community agencies -- how they interact with the domestic agencies like the AFP (Australian Federal Police) and others," he added.

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