Prime Minister Malcolm Turnbull has indicated the Federal Government may want access to the mental health files of individuals suspected of terrorist activity.

The Government's top anti-terror adviser has been asked to investigate Australian terror suspects' potential links with mental illness and past criminal behaviour.

The Prime Minister's request to counter-terrorism coordinator Greg Moriarty is part of a full "lessons learnt" review of Australia's defences against so-called "lone wolf" attacks, such as those carried out with a truck in Nice, an axe in Germany and guns in Orlando.

Mr Turnbull has told Macquarie Radio the Government wants to protect people's privacy, but that needs to be balanced with national security.

"I think it's important that we are all mindful of the new environment in which we're operating and that is why we've got to look at it very carefully," Mr Turnbull said.

Greg Moriarty will also look at terrorists' use of encryption technology to hide online communications. ( AFP: Bay Ismoyo )

Mr Turnbull conceded accessing the files would be a "huge step".

"Yes it would be, and that's why it's important to speak with some precision.

"You've got a number of important interests to balance here. Mental health alone, leaving aside issues of terrorism, is a gigantic challenge."

Mr Turnbull said he valued Australia's "very significant" privacy protections, but his priority was to keep people safe.

"It is critical too that people feel and know that when they go to [youth mental health organisation] Headspace, for example, they do so confidentially.

"That is why it has to be approached carefully, but my most important obligation, my most important responsibility as the Prime Minister of Australia, is to keep the people of Australia safe."

Extreme narrative luring Australians to terror: Turnbull

In ordering the review, Mr Turnbull wrote to Mr Moriarty, noting "the extremist narrative and ISIL's slick propaganda are clearly luring some Australians to support terrorism, but we need to ensure that we are actively looking at all the areas of potential vulnerability".

The coordinator was specifically tasked with checking "the full range of persons of interest who we are watching" as part of terrorism investigations "to see if there is a significant connection with mental health concerns or ... patterns of criminal behaviour".

Mr Turnbull said Australia would have to reassess how gatherings of large people are protected and be mindful of the changing threat level.

"We will certainly have to rethink the way in which we design and protect places where large numbers of Australians are and indeed this is happening around the world," he said.

The review will look at terrorists' use of encryption technology to hide their online communications.

It will also assess whether simple but deadly attacks, such as driving a truck into a crowd, could be prevented.

Mr Turnbull has asked his adviser to investigate the "vulnerability of, and means of protecting, open areas where large numbers congregate" against the threat of a truck maliciously being driven into them.