Prime Minister Malcolm Turnbull says the internet is now a place where terrorists, paedophiles and drug traffickers can hide in the dark.
He says they're using social media and encrypted messaging services such as WhatsApp to communicate, and his government plans to tackle the issue in parliament.
"Internet companies, like the telcos at the moment, will have the obligation to assist the police with getting access to communications and information and data they are lawfully entitled to in accordance with an appropriate warrant or court order."
The laws will be modelled on a system in place in the United Kingdom, giving police and security agencies greater access to encrypted messages.
Unlike so-called "backdoor" access, in which developers deliberately insert known flaws that can provide a way in, the government is after lawful permission to read messages when appropriate.
Attorney-General George Brandis says it's about making sure technology advances don't leave the law behind.
"We intend to work with the companies in order to address what is potentially the greatest degradation of intelligence and law enforcement capability that we have seen in our lifetimes."
Mr Turnbull was quick to claim credit on discussions about encrypted technology at the G20 Leaders summit in Germany.
"What the G20 agreed at our initiative, at Australia's initiative, is that we need to say with one voice to Silicon Valley and its emulators: 'All right, you've devised these great platforms, now you've got to help us to ensure that the rule of law prevails and that they're not exploited by those who want to hide from the law as they plan to do us harm.'"
The Prime Minister's special adviser on cyber-security, Alastair MacGibbon, says the law change will go unnoticed by many Australians.
"To the average person on the street there's no impact whatsover, just like the average person on the street has never had police execute a search warrant on their house, and the average person on the street has never had their telephone intercepted. We're talking about police and domestic security agencies who go about their business in a very focused way trying to weed out criminals and terrorists and others that would do us harm. A very very small percentage of our population."
Labor frontbencher Anthony Albanese has told Channel Nine his party will be examining the law change closely.
"We'll look at any legislation with the same approach that we've had to all of this, which is a commonsense approach that we must keep Australians safe and governments have that responsibility, and we should have a bipartisan approach but we'll look at the detail when it comes forward."
Social media giant Facebook has already announced it will resist the push for it to decrypt messages and hand them over to law enforcement.
The America-based company says it already does all it can to assist.
