Malcolm Turnbull will ask the states to ban parole for violent offenders and those with any link to terrorism when he meets with premiers on Friday.
Yacqub Khayre was on parole when he shot dead a clerk and took a woman hostage in a Melbourne apartment block on Monday night, before being killed in a shootout with police.
Khayre had served jail time over a violent burglary in 2012 and had been on parole for arson since November.
He spent 16 months on remand before being acquitted of the 2009 Holsworthy army barracks terror plot in Sydney.
The prime minister, who will convene the Council of Australian Governments in Hobart on Friday, said the issue of parole was a high priority.
"There have been too many cases of people on parole committing violent offences of this kind," he told reporters in Canberra on Tuesday.
He questioned why Khayre was released, given his extensive criminal history and links with terror.
It was something he raised twice with the Victorian premier following the siege.
"How was this man on parole? He had a long record of violence," Mr Turnbull said.
Attorney-General George Brandis said it was now clear Khayre should not have been released.
While he had not been convicted or jailed for a terrorism offence, his link to terror activities - albeit years ago - should have been taken into account.
"There should be a presumption against parole for someone who has in the past had some involvement into terrorism-related activities," he told Sky News on Tuesday night.
The commonwealth will be asking the states to sign onto nationally-consistent laws, like it did with the post-sentence detention of terrorism offenders.
Senator Brandis noted that ASIO had about 400 active investigations, plus others who had previously come to their attention.
Khayre was not one of those being monitored at the time.
"It's a resource-based judgment," he said.
Opposition Leader Bill Shorten said it was baffling that the man was on parole.
"If we know the person is a criminal, what are they doing out on the streets?" Mr Shorten told reporters in Brisbane.
Victorian Premier Daniel Andrews said the gunman had not only been eligible for parole and received it, but had complied with all its terms and conditions, including drug testing and a curfew.
"We'll look at that very closely, of course, and if there are any changes in any element of this act - which we're considering as an act of terror - then we stand ready to make them," Mr Andrews said of changes to parole.
Parole in Victoria was overhauled after the 2012 murder of Jill Meagher, leading to a drop in parolees committing serious crimes from 60 in 2013/14 to 13 in 2015/16.
A study by the NSW Bureau of Crime Statistics published in 2014 found seven per cent of violent offenders on parole committed a further violence offence, and the likelihood of reoffending significantly dropped where the quality and intensity of supervision is improved.
