Australia will charge two men on Thursday over a "terrorism shooting" in Sydney, one with supplying the firearm to a teenager who was shot dead by police after killing a police accountant and another with "terrorism-related" offences.

Speaking at a counter-terrorism summit on Thursday, Prime Minister Malcolm Turnbull warned that tougher measures may be needed to combat extremist violence, but urged a nimble approach was needed to stymie those seeking to radicalise children.

"As we deal with these threats and the people that seek to turn children into terrorists, we have to be as agile as they are. We have to be prepared to experiment and try new approaches," he said.

Earlier this week his government flagged a controversial plan to lower from 16 to 14 they age at which a child could be placed in preventative detention if they are suspected of being involved in the planning of an imminent attack.

Farhad Khalil Mohammad Jabar, 15, opened fired on police accountant Curtis Cheng at police headquarters in the Sydney suburb of Parramatta earlier this month and was then killed in a gunfight with police outside the building.

Two men, aged 18 and 22, will be charged on Thursday, New South Wales state Police Chief Andrew Scipione and Australian Federal Police Commissioner Andrew Colvin told reporters.

The 22-year-old is suspected of having provided the firearm used to kill Cheng. The other man is being charged with unspecified "terrorism-related" offences that Scipione said could carry a term of up to life in prison.

"These charges represent an exhaustive investigation which has not concluded but in many ways, has just commenced," Scipione said.

Turnbull called for a summit to counter youth radicalisation after the shooting and subsequent arrest of five people in raids in Sydney helped ratchet up anxiety over further militant violence and retaliatory attacks against Muslims.

Australia, a staunch ally of the United States and its battle against Islamist militants in Iraq and Syria, has been on heightened alert for attacks by home-grown radicals since last year.

In September, police shot dead a Melbourne teenager after he stabbed two counter-terrorism officers. Last December, two hostages were killed when police stormed a central Sydney cafe to end a 17-hour siege by a lone gunman, who was also killed.

Earlier this month, a 15-year-old British boy was sentenced to life in prison for inciting an attack on a World War One commemorative event in Australia from his bedroom in northern England.

The discovery of the boy's actions sparked a massive police operation in Melbourne that led to the arrest of five teenagers who were planning an Islamic State-inspired attack, authorities said.

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