Australian police will create a national photo database using existing identification records held by state authorities to identify terror suspects, Prime Minister Malcolm Turnbull said on Thursday, fanning privacy concerns among rights groups.

Turnbull said the database was intended to accelerate the process of identifying potential terror suspects, replacing a time-consuming system that could take up to a week when national authorities requested information from their state counterparts.

"It shouldn't take seven days to be able to verify someone's identity or seek to match the photo of someone who is a person of interest," Turnbull told reporters in Canberra.

"It should be done seamlessly and in real time," he said.

The biometric database stops short of enabling real-time detection of suspects by scanning large crowds and alerting authorities when people on a security watch list are identified, similar to a system in place in China.

China leads the world in the use of facial detection, even allowing education authorities to use the system to catch students cheating on exams, but Australia will limit the new database to police and intelligence agencies only.

Turnbull said the system would not be connected to Australia's existing network of closed-circuit televisions, easing fears that authorities were seeking to create an automated system of detection.

Australia, a staunch U.S. ally, is on heightened alert after a series of "lone wolf" attacks in recent years, and has sent troops to fight alongside the United States and other allies in Afghanistan and Iraq.

It is also on alert for dozens of home-grown radicals returning after fighting for Islamic State and other extremist groups in Syria and Iraq.

Turnbull said police were hampered by the current outdated, state-based system but Fergus Hanson, head of international cyber policy centre at the Australian Strategic Policy Institute, said the new biometric system raised concerns about potential abuses of power.

"I think most Australians would agree that using facial recognition to track down terrorists is a good idea," he said.

"People might say using it for tracking down murderers is a good idea, but what about people who haven't paid their parking fine?" Hanson said.

The new database was unveiled as Turnbull met state leaders and announced Australia would now double the length of time terror suspects could be held by police to two weeks after their arrest.

Australia's detention laws came into focus earlier this year with the arrest of four men on suspicion of planning an "Islamic inspired" plot to bring down a passenger plane.