"State and territory police forces remain the best first response to terrorist incidents, immediately after an attack starts", The Guarding quoted Turnbull as saying in a joint statement with the defence minister, Marise Payne.
Speaking on Monday at Holsworthy Barracks in Sydney, Mr Turnbull said: "Our enemies are agile and innovative".
Defence will offer soldiers for embedding within police forces to bolster engagement between authorities.
The announcement follows a review of security forces' responses to a series of incidents in Australia and overseas - including the 2014 Sydney cafe siege.
Under the current system, the ADF can only be deployed if state or territory police believe their capability or capacity to respond has been exceeded.
Defence Industry Minister Christopher Pyne earlier refused to be drawn on what might have happened had the changes been in place before then.
Shadow Minister for Defence Richard Marles said he supported the changes, but said Mr Turnbull politicised the military by posing with heavy weaponry and commandos for a televised press conference.
State and federal governments are working together on recommendations from the coroner's report.
"Our police and law enforcement are the best in the world. if it's a situation where we have some specialist capability within the Australian Defence Force, or we had a requirement to use the Australian Defence Force in counter-terrorism response, I think Australians would understand we need to have the most flexible arrangements possible".
Labor is expected to support the new measures.
The Opposition will seek more details and a briefing from the government, but wants to deal with the proposals in a bipartisan way.
As well special forces soldiers will provide specialised training to state and territory police forces and some may be embedded to improve co-operation.
Australia's defence laws will be overhauled the smooth the way for soldiers to be deployed to assist local police dealing with terrorist threats.
The exact circumstances under which the ADF may be called upon are unclear at this stage.
STATE premiers, ministers and police commissioners will make decision based on need.
The Government will also make changes to the Act to make it easier for Defence to support the police response, such as the ability to prevent suspected terrorists from leaving the scene of an incident.