Australian Security Intelligence Organisation director-general Mike Burgess said some violent fringe groups were looking to join up as Defence personnel in order to attain training and grow capability.

It comes as the threat of ideologically-motivated extremism, formerly referred to as right-wing extremism, has continued to grow and is now taking up around half of the agency's onshore counter-terrorism caseload.

The top intelligence official said his agency had been trying to proactively provide security assessments of flagged individuals to Defence as outlined in its latest annual report.

In May, the two agencies agreed to a new framework, allowing ASIO and Defence to share intelligence over any personnel suspected of having links to the violent nationalist groups.

Unlike religiously-motivated violent extremism, ASIO said the ideologically-motivated groups were more widespread across the country's regions and were security-conscious, adapting their cyber security setups to avoid being caught.

The groups remained focused on producing propaganda, radicalising and recruiting others, and preparing for an anticipated societal collapse, the report added.

But another threat was emerging, Mr Burgess noted in an estimates hearing in October.

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There had been growth in single-issue violent extremism, which had been fuelled further by the impact of COVID-19 lockdowns.

Mr Burgess said it was a broad church that could include nationalists and neo-Nazis, to the anti-vax or involuntary celibate, or "incel", movements.

The anti-lockdown protests in Melbourne in September were an example, he said.

"The most likely attack in Australia will be that of a lone actor, someone who mobilises to violence with little or no warning," he told the hearing.

While racist, violent extremism had become a fast rising threat in the country, Mr Burgess said it would soon be surpassed by something different entirely.

Foreign interference and espionage is expected to become the country's principal "security concern" overtaking the threat of terrorism within five years.

"Foreign spies are attempting to obtain classified information about Australia's trade relationships, defence and intelligence capabilities," the report said.

"They are seeking to develop targeted relationships with current and former politicians, and current and former security clearance holders.

"They are monitoring diaspora communities in Australia and, in some cases, threatening to physically harm members of these communities."

The spy agency head said in his estimates appearance the threat was "unacceptably high" and he was worried some individuals might inadvertently be assisting espionage attempts.

"That's what I would suggest as corrosive to democratic society just as much as [a] lack of transparency," he said.

"Because, get out there in the sunlight, and everyone can make their informed judgments."

The country's spy watchdog meanwhile has revealed ASIO hasn't always been compliant with its own rules and processes.

In its annual report released last month, the Inspector-General of Intelligence and Security Christopher Jessup said there had been a number of examples where the intelligence agency had failed to properly record keep or follow internal policy.

The IGIS flagged a number of investigate cases had not followed proper ministerial guidelines or procedures and only a fifth of them had been reported to the oversight body by ASIO.

"IGIS has indicated that it expects more proactive reporting given ASIO has the capacity to detect most instances via system generated reporting," the report said.

The oversight body also outlined the agency's security assessments, warrants and other analytic offerings were not always referenced in a similar way.

It meant there had been variability in how officers had referenced materials and reached decisions.

As a result, ASIO said it would review and update its internal policies to improve consistency.

The IGIS added it was preparing for an expansion of its jurisdiction to include law enforcement agencies, including the Australian Criminal Intelligence Commission, Australian Federal Police and AUSTRAC.

While awaiting a decision by government, it had begun developing an interim plan and building its understanding of the agencies expected to come under its purview.

Mr Jessup said it had yet to reach an anticipated staff total of 55 for a number of reasons, including delays over staff security clearances.

The expansion has been under "active consideration" since 2017 when the recommendations were first made.

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