Turnbull said police will remain "the best first response" to terrorist incidents, but the raft of changes will make it easier for the military to help the police deal with such attacks.
The Sydney Morning Herald reported Mr Turnbull described the current processes as "very cumbersome", with one of the major changes removing a clause from the Defence Act saying the military is only to be deployed if the state is unable or unlikely to be able to "protect itself against the domestic violence".
The military will also be allowed on the streets to support the wider police response, including blocking potential suspects from leaving the scene.
And the military will offer to take a bigger role in training and assisting specialist police anti-terrorism units, such as the tactical response group in WA, to ensure they are prepared for attacks.
Defense officials will also provide specialized training to police forces as part of the measures.
Prime Minister Malcolm Turnbull and Defence Minister Marise Payne will announce the changes on Monday.
Australian Defense Forces are to increase their support to state and local governments when responding to terrorist incidents.
But he said if there was a protracted incident like the Lindt Cafe siege, the new rules would mean soldiers could be called in.
"They can sniff it from a mile away and they will judge people accordingly and it is for all of us in this space to use our judgement appropriately to make sure that we are doing this in a way which is respectful to the ADF because I can assure you, the Australian people will absolutely judge our actions as indeed they should".
Former SAS commander-turned federal MP Andrew Hastie has previously said the Sydney siege response demonstrated state police were "not up to the task" of dealing with the unique nature of Islamist terrorism.
Mr Turnbull told The West Australian details of the rules would be thrashed out with States and Territories at Council of Australian Governments meetings, and through the Australia-New Zealand counterterrorism committee.