Security authorities believe the chances of a violent extremist act are now more likely than when authorities lowered the alert level to "possible" in November 2022.
ASIO's director-general Mike Burgess said Australia's security environment had become more volatile and unpredictable.
"More Australians are being radicalised and being radicalised more quickly," Mr Burgess said.
"More Australians are willing to use violence to advance their cause. Politically motivated violence now joins espionage and foreign interference as our principal security concerns."
He also noted the conflict in Gaza was not the "cause" for raising the terror level, though it had been a "significant driver".
Mr Burgess said, however, raising the threat level did not mean ASIO had intelligence plans of a current attack or expectations of an imminent attack.
But he said agencies had disrupted eight incidents in just the last four months that involved alleged terrorism or were investigated as potential acts of terrorism.
Those cases included risks of knife attacks or attacks with improvised weapons and involved young who had been radicalised — the youngest 14, and the oldest 21.
Prime Minister Anthony Albanese said the raised level had been driven by increases in youth radicalisation, online radicalisation and the rise of "new mixed ideologies".
"I want to reassure Australians probable does not mean inevitable, and it does not mean it is intelligence an imminent threat or danger," Mr Albanese said.
"[But] when the temperature of the security environment is rising, we must lower the temperature of debate."
Opposition Leader Peter Dutton called on Australians to watch out for terror threats.
Prime Minister Anthony Albanese has released a joint statement with the leaders of Canada and New Zealand calling for a ceasefire in Gaza.
"We do live in a precarious time," he said.
Mr Albanese said Australians must be able to resolve their differences peacefully and debate political issues like the conflict in Gaza peacefully.
"No-one is suggesting should have conformity to particular views, but the way express things is important," he said.
"It is not normal to have in occupations for months outside electorate offices, where the work of those electorate offices is to assist ."
Asked if he agreed if the temperature should be brought down, Mr Dutton said he did.
But the opposition leader reiterated his criticism of Mr Albanese's response to pro-Palestinian protests outside the Sydney Opera House last October and the ongoing encampments on university campuses.
"I think the proper response is required from the leader of our country to show strength, not weakness.
He said anti-Semitism was "occurring on a common basis in our country" at an "unprecedented" level.
Mr Dutton said leaders should be clear that we "adhere to a strong set of values … the rule of law" and "respectful debate".
The official terror alert level was last raised to "probable" in 2014 with the emergence of the Islamic State terrorist group.
Look back at how ABC readers and other Australians responded to this live moment.
That's the end of our live coverage of the prime minister's press conference.
The PM confirmed Australia's threat level has been raised to "probable".
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The ASIO boss reiterates that while Gaza is not the cause of the terror alert increase, it was a "significant driver".
"It's driven more emotion and heat into society," Burgess says.
He's asked whether particular groups in Australia are at more at risk than others.
"There's plenty of anti-Semitism but there's plenty of Islamophobia at the same time. It's almost equal treatment, not quite, but almost equal treatment," he says.
Anthony Albanese says he would hate to see a circumstance where there could be limits on interaction between voters and MPs.
"One of the things I like this country is you were able to interact with voters and the general population in a supermarket, walking down the street, at the footy, walking the dog," he says.
"It is a good thing. In some countries it is just not possible for citizens to talk their political leaders one-on-one. We should cherish that and evaluate and I'm confident that will occur.
"At the same time, we have made it very clear that there has been a considerable increase in the threats that have been made to members of Parliament. There are more having to have security around them and that is a real concern.
"That is a really important thing Australians, something we should be proud of."
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