Critics have argued that reforms allowing Australian intelligence officers operating abroad to be able to "use reasonable force" well beyond situations of self-defence amounted to a licence for spies to operate like paramilitary special forces.
Australian spies operating overseas will have more leeway to use force, including lethal force, under legal reforms put forward by the conservative government on Thursday.
Under the proposals, intelligence officers operating abroad for the Australian Secret Intelligence Service (ASIS) would be able to "use reasonable force" well beyond situations of self-defence.
The measures would allow spies to use firearms more readily, as well as restrain or detain anyone posing a risk to their operations.
Officers and agents - a tradecraft term for any informant or operative - will also be allowed to use force to protect bystanders or hostages.
Justifying the reforms, Foreign Affairs Minister Marise Payne cited a "more complex" world and "new circumstances unforeseen" when current rules were forged a decade and a half ago.
Those rules allow intelligence officers to use force to defend only themselves, other staff, or agents.
Leading Australian government lawyers had expressed concern that spies could break the law by defending bystanders in the course of operations.
The government tried to bat away allegations the reforms amounted to a licence for spies to operate like paramilitary special forces.
"ASIS does not have, nor is it seeking, an offensive armed capability," the government said in a statement to parliament Thursday.