Australian Security Intelligence Organisation director-general Mike Burgess on Wednesday delivered his second annual threat assessment in Canberra.

Mr Burgess said for those intent on violence, more time at home online meant "more time in the echo chamber of the internet on the pathway to radicalisation".

"They were able to access hate-filled manifestos and attack instructions, without some of the usual circuit breakers that contact with community provides," he said.

"Extreme right-wing propaganda used COVID to portray governments as oppressors, and globalisation, multiculturalism and democracy as flawed and failing.

"Islamic extremist narratives portrayed the pandemic as divine retribution against the West for the perceived persecution of Muslims."

He said in the case of foreign spies "the lack of opportunity for international travel and reduced social mobility meant their tradecraft evolved, and they increased their online activity and approaches".

Some of Australia's adversaries were seeking to undermine and exploit Australia's pandemic recovery.

"We have already seen extremists trying to stoke social divisions, and foreign intelligence services wanting intelligence about Australia's key export, technology and research industries."

Mr Burgess said ASIO had also become aware of an Islamic State video last year which referenced the Australian bushfire crisis to encourage arson attacks in the West.

"It also featured a firearm--similar to the weapon used by the Christchurch attacker--with inscriptions such as 'today we invade you in your own homes' and 'the Islamic State is remaining'."

The intelligence chief last year called out right-wing extremism as being a growing threat.

"Since then, ideological extremism investigations have grown from around one-third of our priority counter-terrorism caseload, to around 40 per cent," he said.

"The average age of these investigative subjects is 25, and I'm particularly concerned by the number of 15 and 16 year olds who are being radicalised. They are overwhelmingly male."

The COVID-19 pandemic had reinforced extremist beliefs about societal collapse and a "race war", he said.

"An ideologically motivated terrorist attack in Australia remains plausible, most likely by a lone actor or small cell rather than a recognised group, and using a knife or a vehicle rather than sophisticated weapons."

The ASIO boss revealed his agency is changing its language, sorting people who pose violent threats into two categories: religiously motivated violent extremism and ideologically motivated violent extremism.

"Labels like 'left' and 'right' often distract from the real nature of the threat," he said, adding that some Muslim groups found the term "Islamic extremist" as misrepresentative.

Espionage and foreign interference continued to be levelled at not only the federal government but all Australian states and territories.

Last year ASIO investigated a "nest" of foreign spies targeting relationships with current and former politicians, a foreign embassy and a state police service.

"They successfully cultivated and recruited an Australian government security clearance holder who had access to sensitive details of defence technology."

ASIO investigated, identified and verified the activity, cancelling the government employee's security clearance, confronted the foreign spies, and "quietly and professionally removed them from Australia", Mr Burgess said.

Australian Associated Press