Led by former police chief commissioner Ken Lay and former Supreme Court judge David Harper, the panel will examine all stages of the system from preventative to post-sentence measures.

The review will leave no stone unturned, according to the state government, and will encompass any laws that prevent, investigate, monitor and respond to acts of terror.

The panel, announced on Sunday, will find and remove any legislative barriers that police come up against when responding to terrorism.

Victorian Premier Daniel Andrews said: "Nothing is off the table."

"This may not be popular but we will act to make sure our police and the courts have the powers they need to prevent and respond to terrorism and violent extremism in our community," he said.

Attorney-General Martin Pakula said: “This review will look at our entire law enforcement framework, to ensure we have the strongest laws, powers and procedures in place to protect Victorians.”

Police Minister Lisa Neville said police needed to have powers to respond to the changing challenges posed by terrorism.