"Remnants of ISIL [Islamic State], however, remain dangerous and will require ongoing attention," outgoing head of the Australian Security Intelligence Organisation Duncan Lewis wrote in the annual report.

"Our domestic terrorist threat environment has not significantly improved following the collapse of ISIL."

Mr Lewis said Australians who had left to fight in the conflict could take months or years to return and would present a longer-term threat.

The spy agency report described the many and varied threats Australia faces, including daily acts of espionage and interference targeting the government, academia and industry.

"These acts ... are of unprecedented scale and sophistication," Mr Lewis said.

Foreign states could threaten Australia's sovereignty through attempting to monitor and control "the activities, opinions and decisions of sections of the Australian community in a way that impinges on the freedom of speech, association and action of members of the Australian public, media organisations and government officials," the report said.

The spy agency identified a bureaucrat with security clearance who was in regular contact with a foreign intelligence service and recommended their security clearance be revoked, after which "appropriate action was taken".

Threats posed by right-wing extremists were also changing, the agency said, and networks were "better organised and more sophisticated than those of the past".

At the same time as threats were becoming more sophisticated, ASIO was struggling to meet demand for its advice, and expected demand to grow further.

Mr Lewis said heightened levels of espionage and interference - combined with greater awareness of the twin threats - were stretching resources.

"With the terrorist threat showing no signs of significantly decreasing, ASIO has limited scope to redirect internal resources to address the increasing gap between demand for our counter-espionage and foreign interference advice and our ability to furnish this assistance," he said in the report published on Wednesday.

Mr Lewis said the agency faced a more complex and uncertain future.

"ASIO will need to build new capability and capacity to meet current and future demand for our trusted advice and expertise.

"We will necessarily prioritise our finite resources - across our counter-terrorism, counter-espionage and foreign interference, border integrity and protective security advice programs - towards addressing activities of the greatest potential harm to Australians and Australian interests."

- with AAP