Federal cash will flow to battle terrorist propaganda online and bring a suite of new technologies to the intelligence agencies.

But a third of the new money will go to compliance costs for businesses that must adhere to metadata laws.

A pre-budget announcement shows internet companies will get $131 million to help pay for the costs of storing customer information for two years.

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Another $296 million will go to the intelligence services to update IT systems and “capabilities”.

The smallest portion, $22 million, will be spent on fighting terrorist propaganda online targeting Islamic State recruitment methods.

The extra money “will make it harder for terrorist groups to attract vulnerable Australians”, the Government said.

The $450 million total spend adds to the $630 million in the last budget.

Industry group The Communications Alliance, which represents most major and some smaller telcos estimated the cost of compliance would cost $300 million, the Australian reported.