The first formal call by the terrorist group for a war against and in the West was issued by the group's spokesman Abu Muhammad al-Adnani ash-Shami yesterday.
This morning Australian Federal Police officers armed with assault rifles could be seen on guard outside Parliament House in Canberra.
The decision to post heavily-armed police officers outside Parliament House was taken by Speaker Bronwyn Bishop and the President of the Senate, based on advice from security agencies.
In a speech that was uploaded to the internet as an audio file, al-Adnani said: "If you can kill an American or European infidel – especially the spiteful and cursed French – or an Australian or a Canadian, or any other disbeliever from the infidel fighters ... then rely upon God and kill them in any way possible."
Foreign Minister Julie Bishop, who is in New York ahead of UN Security Council meetings on Iraq and Syria later this week, said no-one was safe from Islamic State militants.
"Our agencies are treating this threat as genuine, and it's quite apparent that ISIL is prepared to take on anyone who doesn't share its views," she told AM, using an alternative name for Islamic State.
"We are a threat – not because of what we're prepared to do to combat ISIL, but because of who we are.
"ISIL is killing Shia, Sunni, Kurds, Christians; they're killing aid workers, journalists.
"That's why we're so committed to containing and degrading and destroying ISIL as far as we can in cooperation with other countries."
US launches attacks on Islamic State in Syria
Today US and allied warplanes launched attacks on Islamic State targets in Syria in what the Pentagon said was an ongoing operation.
US media reports said Arab nations including Jordan and Saudi Arabia, had played a supporting role in the air assault, although their exact roles were unclear.
Australia has sent fighter jets and about 600 troops, including special forces soldiers, to the Middle East to prepare for possible deployment in coming weeks.
Prime Minister Tony Abbott is due to leave tonight for meetings in New York, where Ms Bishop said she had already spoken to Arab League nations about the situation.
"The Arab States have already met. They committed to something called the Jeddah Communiqué – that means that they are prepared to support the Iraqi government, they are prepared to take on ISIL and its ilk through military, political and other means," she said.
"I've been speaking specifically to the foreign ministers of Saudi Arabia, Kuwait, Qatar, the United Arabs Emirates, Jordan, Turkey.
"There is universal condemnation of ISIL and there is a universal commitment to working in cooperation to stop this threat from spreading beyond the Middle East and most certainly containing and destroying it in Iraq and Syria."
Ms Bishop said a global counter-terrorism forum being co-hosted by the US and Turkey would be focusing on the funding of terrorism through kidnapping for ransom and looking at ways of countering violent extremism.
Bernardi raised concerns about ground war in party room meeting
This morning Mr Abbott invited his MPs to raise any concerns they had about the prospect of the Australian Defence Force being involved in the conflict in Iraq.
The ABC understands Mr Abbott asked the question in this morning's Coalition party room meeting.
The Government has repeatedly said it would not take any action unless it was invited by the Iraqi government.
It is understood South Australian Liberal senator Cory Bernardi raised the issue of troops on the ground, saying he doubted the electorate had an appetite for conflict.
Government rejects suggestions raids were 'theatre'
Last night Attorney-General George Brandis told the ABC's 7.30 program that Islamic State's call to kill Australians underlined the need for last week's counter-terrorism raids and the decision to tighten security.
"As the Prime Minister has been saying all along, these people have set their face against the West in the most belligerent imaginable way," he said.
"This is to be taken seriously."
Justice Minister Michael Keenan and his Opposition counterpart were forced to dismiss suggestions that last week's terrorism raids were some sort of political theatre.
Mr Keenan faced claims on the ABC's Q&A program last night that the raids were part of a political spectacle designed to win support for Australia's actions in Iraq and the proposed national security laws.
"There were raids at over a dozen locations all around Sydney and there was some subsequent activity in Queensland," he said.
"And, of course, if you are going to send armed police into such an enormous number of locations in a city, then of course people are going to notice.
"It's up to the police to inform people about what is going on."
Shadow attorney-general Mark Dreyfus said neither terrorist acts nor the anti-terrorism raids could be described as theatre.
"Terrorism involves the commission of real crimes, real murders, real injuries to real people and counter-terrorism is the efforts of our agencies to deal with the threat of those crimes being committed," he said.
A second round of counter-terrorism legislation, targeting foreign fighters, is due to be introduced to Parliament on Wednesday.
Kurdish refugees flee Islamic State advance
More than 130,000 Kurdish refugees have poured across the Syrian border into Turkey in the last four days as they flee Islamic State militants, but Turkey is not yet a part of the US-led international coalition.
Ms Bishop said Turkey was working behind the scenes and was "bearing a considerable burden in the number of refugees who are pouring into Turkey – but so is Lebanon, so is Jordan".
"This is a regional issue of mammoth proportions. Australia has been prepared to contribute in the past and we'll continue to do so," she said.
"This is an enormous humanitarian crisis, there are millions of displaced people, people looking for support and that's why it's so important for us to back the new Iraqi government as it seeks to struggle with this enormous crisis that it's confronting."
In Baghdad, Australia's Defence Minister David Johnston met new Iraqi prime Minister Haider al-Abadi as well as other government members.
"If we were to take part in an effort it would be at the invitation of and request of the Iraqi government, and it's important that we meet with them and talk to them about their needs," Ms Bishop said.
"Australia will not do this lightly, we will get as much information as we can, we will consider what is a clear and proportionate role, we will consider what timeframe is required, what resources and assets we can reasonably contribute and then we will make a decision.
"It will be discussed in our national security committee; it will be discussed in our Cabinet.
"But we have to have an understanding of what the Iraqi government is expecting and what challenges it faces."