The Australian government on Tuesday announced a A$64 million (S$74.4 million) package to help prevent youngsters from being radicalised and joining extremist groups in the Middle East.
The funding follows a warning from spy chief David Irvine this month that the bloody conflicts in Iraq and Syria are creating a new generation of militants.
Prime Minister Tony Abbott said up to 60 Australians were fighting alongside Islamic State (IS) jihadists, while another 100 were actively working to support the movement at home.
"Recent images of brutal killings in Syria and the brazen presence of Australian citizens amongst the foreign fighters highlights the need for action to counter radicalisation," Abbott said, adding that IS was using "medieval barbarism allied to modern technology".
"That's how serious and dangerous this movement is. Because of the Australians who are involved with this movement, what might otherwise be a problem in a far away country is a problem for us."
Abbott said the A$64 million would help support community groups and security agencies, with the emphasis on preventing radicalisation and reducing the threat of home-grown terrorism.
The premier gave youth activities, mentoring and employment support as examples of how the funding may be spent. The funding will also help set up a new multi-agency group to investigate, prosecute and disrupt foreign fighters and their supporters.
Abbott said the government had been heartened by the strong support shown by local Islamic leaders to tackle the issue.
"As prime minister, I emphasised to them that the government's measures are not directed against any particular community or religion - they're directed against terrorists and potential terrorists," he said.
The cash is part of a broader A$630 million package announced last month to boost counter-terrorism via security and intelligence agencies.
It came as a poll in The Australian newspaper on Tuesday showed voters overwhelmingly support a proposed crackdown by the government on fighters returning to Australia from countries such as Iraq and Syria. The survey revealed that 77 per cent of the 1,207 people questioned would back new laws requiring people travelling to particular countries to prove they have not been in contact with terrorist groups.
Counter-terror legislation under preparation will make it an offence to travel without a valid reason to a so-called designated area, as nominated by intelligence agencies.
Australia is one of many countries with nationals fighting in the war zones, with pressure growing for governments worldwide to step up action to prevent the radicalisation of young Muslims.