Duncan Lewis, head of the Australian Security Intelligence Organisation (ASIO), said he was "not declaring victory" despite a slowdown in the flow of nationals travelling to fight with militant organisations such as Islamic State in the Middle East.
"I don't want to be giving any sense that we are through the worst of this. I don't think that's right," he told the Sydney Morning Herald, adding that some 44 Australians have so far died in Syria.
Some 27,000 to 31,000 people from at least 86 countries are estimated to have headed to Iraq and Syria to fight since 2011, intelligence consultancy the Soufan Group said in a report last week.
Australia's Attorney-General George Brandis said recently some 110 of its nationals were thought to be in the two countries, down from previous estimates of 120.
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Lewis credited new laws allowing for passports to be cancelled to prevent Australians from leaving the country, as well as growing awareness among communities and families, for a shift in the trend.
While ousted prime minister Tony Abbott used strong language against IS and recently said "we can't remain in denial about the massive problem with Islam", current leader Malcolm Turnbull has taken a more moderate line.
Foreign Minister Julie Bishop said today she supported Lewis' reported actions.
"If the director-general of ASIO has formed a view that the public debate might have the potential to put at risk the work that his organisation is undertaking in counter-terrorism, then of course he should speak out," she said in Sydney.
At the same time, financial intelligence agency Austrac said this month there was a 300 percent rise in the 2014-15 financial year of reported suspicious transactions possibly linked to terrorism compared to the previous period.