The Turnbull government is set to embark on a major independent review of the nation's intelligence agencies as Australia faces an unprecedented array of security challenges ranging from terrorism to the rise of China and cyber-spying.

Prime Minister Malcolm Turnbull's department has confirmed that it is putting in place arrangements for the first major intelligence review since 2011 and the third since the September 11 terrorist attacks on the US, which prompted a reshaping of intelligence efforts in Australia and among its allies.

The review is expected to tackle the unprecedented need for the nation's six intelligence agencies to balance immediate security intelligence requirements to combat terrorism including "lone wolves" with longer-term considerations about geo-strategic changes flowing from the shift in power and wealth to the Indo-Pacific region.

A spokeswoman for the Department of Prime Minister and Cabinet, which is setting up the review, told Fairfax Media: "We are working through a proposal for a periodic review and the details involved. It is expected that these considerations will take at least several weeks."