The federal government will ban foreign political donations, require lobbyists for foreign powers to register and impose offences for acts of foreign interference in sweeping new laws to be introduced to parliament.

Prime Minister Malcolm Turnbull made the announcement on Tuesday in what he labelled the most significant reforms to foreign interference laws in decades.

“This will be the most significant overhaul of our espionage, counterintelligence, political donation legislative framework in decades,” he told reporters in Canberra.

“We should not be naïve, foreign powers are making sophisticated attempts to influence the political process.”

Mr Turnbull said Australia was proudly multicultural, but the government must recognise there were more attempts to influence Australia’s political processes thanks to modern technology.

He pointed to “disturbing reports” about influence from China.

“But these reforms are not about any one country,” he added, pointing to Russian influence in the US election.

A Chinese embassy spokesman told SBS News that China did not interfere in other countries’ domestic affairs.

“We urge the relevant people in Australia to discard prejudice and speak and act more in a way that will be conducive to boosting China-Australia relationship and deepening cooperation between them,” the spokesman said.

“A sound and steady China-Australia relationship serves the common interests of both sides.”

Political donations will also be banned from foreign bank accounts, non-citizens and foreign entities. Charities will be exempt from receiving and using foreign donations for non-political activities.

Anyone who engages with Australian politics on behalf of a foreign state will be required to register their ties. Failing to disclose those ties will impose criminal penalties.

The offence of “espionage” will be updated from just passing on information to possessing or receiving information.

For the first time, soliciting a person to engage in those acts will be criminalised, as will preparing and planning those acts.

“If you act covertly on behalf of a foreign actor, in a way that harms Australia's national security, to influence the political process, or a Government decision, that conduct will be criminalized,” Attorney-General George Brandis said.

Senator Brandis said the allegations against Labor senator Sam Dastyari would not reach the threshold of existing laws but that was why new laws would address that “gap”.

The new laws would apply to organisations like GetUp, the government also confirmed.

“Now, to ensure that there is no inappropriate foreign interference in our democratic system, we are banning all foreign donations, as I've said. Not just for political parties, but also for candidates, Senate groups, and for political campaigning organisations,” Finance Minister Mathias Cormann said.