Prime Minister Malcolm Turnbull has said Australia's century-old defence laws could be adjusted in accordance with the recommendations of the Coroner's inquest into the deadly 2014 Lindt Cafe siege, raising the possibility of the Australian Defence Force being given greater leeway to step into terrorist incidents.

It followed findings that there was no legal basis to ordering army commandos to rush the cafe because it was a single gunman incident, which while presenting a "real and terrible" threat was "at all times within the capacity of the police to handle".

With Australia's terror alert level remaining at "probable" in the immediate aftermath of the Manchester atrocity, Mr Turnbull hinted at significant legislative changes, declaring "we must be more agile than those who seek to do us harm - we will always work tirelessly to keep Australians safe".

Three people died in the 17-hour siege, including the deranged self-declared Islamic State terrorist Man Horan Monis, and two hostages.

"The government will consider the recommendations carefully and continue to strengthen arrangements where needed," Mr Turnbull told question time.

The Prime Minister's comments to Parliament followed the release of the inquest findings in which muted criticism were made of some Commonwealth law enforcement agencies for withholding security and surveillance information about Monis, and amid ongoing speculation that Special Forces commandos should have been deployed in the Sydney siege.

NSW State Coroner Michael Barnes branded those suggestions "simplistic and unrealistic" but nonetheless recommended that the Turnbull government should consider changing the rules to make it easier for the Australian Defence Force to take charge during terror incidents, given the evolving and complex nature of terror threats.

He said in the Lindt Cafe siege, where 18 people were held hostage at gunpoint, the requisite conditions did not exist for that military intervention, largely because the NSW Police Force believed it had the matter in hand.

Mr Barnes cited the current law, Part IIIAAA of the Defence Act 1903, noting that "the NSW Police Force considered it had the capacity to respond effectively to Monis' actions and did not advise the NSW government otherwise".

He said the ADF could only intervene "and assume responsibility for such an incident if, on application for assistance from a state or territory, the Commonwealth is satisfied that the state or territory's police force is unable to mount an adequate response".

The finding is significant in light of claims by some experts that the NSW Police adopted the wrong mindset from the beginning by treating the hostage crisis as a domestic siege rather than a terrorist incident in which Monis always intended to die and to take innocents with him.

According to some experts, ADF snipers operating under different rules of engagement possessed the higher grade of weapons and high-velocity hardened ammunition to shoot Monis through the cafe's plate glass.

Mr Barnes noted that the challenge of modern terrorism exposes the inadequacy of existing arrangements for the jurisdictional transfer of responsibility, including "the legislative and policy framework for call-out".

Communications weaknesses, and an over-reliance on ill-informed psychological assessments within the NSW Police Force management of the siege were not helped by the other systemic inter-agency resistance, such as the Australian Security Intelligence Organisation's decision to withhold information pertaining to Monis.

Mr Barnes noted that 18 reports to the National Security Hotline about Monis' Facebook page had been received and "triaged" by ASIO and that this process was not even complete at the time of the siege meaning that "as a result, these 18 leads were still open as at 15 December, 2014".

The Coroner did agree that Monis' demands to speak to then prime minister Tony Abbott could not be agreed to under the rules but suggested that some other concessions to allow Monis to express himself, perhaps through a broadcast statement read out by one of the hostages, could have helped build trust and establish a pathway for a negotiated outcome.

While the ASIO section of the inquest was conducted in-camera, and the findings sealed, Mr Barnes said it was clear "the gaps and shortcomings identified in the closed version of this chapter could have real bearing on future assessments of political motivated violence risk by ASIO".

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