A super-ministry where one minister oversees border security, the federal police and the spy agency ASIO is expected to be considered by Cabinet tomorrow.
A review set up last November has been examining whether the current structure is appropriate.
The new proposed ministry is likely to mirror the Home Office in the United Kingdom which oversees all domestic security agencies.
Last week while visiting the UK, Prime Minister Malcolm Turnbull said, "We're always very interested in learning about the British experience".
"We have to be dynamic, agile, constantly asking, 'Can we improve the way our agencies are keeping Australians safe?' And we will always continue to seek improve them," he said after a meeting with British Prime Minister Theresa May, who used to be the minister in charge of the British Home Office.
Discussion has swirled all year about a potential change to the intelligence agencies to set up a super department of Homeland Security.
Immigration and Border Protection Minister Peter Dutton is widely tipped to be in charge of the new department.
It would likely mean the Attorney-General would no longer be in charge of the domestic spy agency ASIO — which would be transferred to the new department.
Last week, Attorney-General George Brandis emphasised the strength of the current system.
"We have the best intelligence and policing services in the world. They have prevented 12 attacks on Australian soil since September 2014, including some that would have been mass-casualty attacks," Senator Brandis told AM.
But he also said he agreed with Mr Turnbull, "that we must always be on the balls of our feet about this to make sure that even though the arrangements as they exist at the moment are working well, that they can't be improved".
He said arrangements are always under review, "to make sure that they are as good as they possibly can be".
If the expanded ministry is set up it would likely mean Justice Minister Michael Keenan would lose the heart of his portfolio because the Federal Police would be transferred to the new department.
The Australian Secret Intelligence Service (ASIS) is the overseas spy agency and is part of the Foreign Affairs Department. It is understood to be likely to remain in that portfolio rather than being moved into the super department.
If Cabinet signs off on the changes, it is not clear how long it would take to implement the significant changes that would be involved and when any ministerial reshuffle would happen.