Nov. 2 (Bloomberg) -- Australian Prime Minister John Howard said the government has received information on a credible terrorism threat and will recall legislators to give police extra powers to deal with the threat.

``The government has received specific intelligence and police information this week which gives cause for serious concern about a potential terrorist threat,'' Howard told reporters in Canberra. He declined to give any specifics about the threat.

Howard said he would recall the upper house Senate tomorrow to pass an amendment to anti-terrorism legislation to increase the ability of intelligence officers and law enforcement agencies to deal with the threat.

Australia, which has troops serving in Afghanistan and Iraq, has been on a medium terrorism alert since 2001. While there hasn't been a major terrorist attack on Australian soil, the government has maintained it's a possibility.

``The threat of a terror attack in Australia has increased as a result of our role in Iraq,'' said Ken Macnab, who heads Sydney University's Center for Peace and Conflict Studies.

The Australian dollar and stocks fell after Howard's warning. The benchmark S&P/ASX 200 index fell 0.4 percent to 4456.30 at the 4.05 p.m. close in Sydney after earlier rising to 4482. The currency fell to 74.16 U.S. cents before recovering to 74.39 cents.

``It's a case of traders taking their bids off the board until the situation becomes clearer,'' said Paul Xiradis, who helps manage $2.3 billion at Ausbil Dexia Ltd. in Sydney. ``Investors would rather buy stocks a bit later when there's a touch more certainty about the seriousness of the threat.''

`Real Threat'

The amendment to be introduced into parliament this week will mean prosecutors won't have to show a suspect was planning or assisting in a particular terrorist act in court cases.

``It will be sufficient for the prosecution to prove that the particular conduct was related to a terrorist act,'' the government said in a statement.

Australia's main opposition Labor Party, which has been split on the need for tougher anti-terrorism laws, said it would back the amendment.

``The threat of a terrorist attack in Australia is real,'' Labor leader Kim Beazley told reporters in Canberra.

Howard is negotiating with state governments to introduce other anti-terror laws that will give police extra time to detain terrorism suspects, increase security at major airports and make it an offence to support insurgents in any country where Australian troops are deployed.

Home-Grown Terrorists

The federal government, which shares responsibility with the states for policing and law enforcement, wants the laws introduced by the end of the year.

Macnab said he was doubtful the new laws would do much to reduce the terrorist threat.

``The haste with which the government is trying to put through these changes is a concern, particularly when they threaten our civil liberties,'' he said.

The Australian Security Intelligence Organization this week warned about the threat of home-grown terrorists and said an attack in Australia was feasible.

Australian citizens were among the 202 who died in explosions in Bali in October 2002, which was Indonesia's worst terrorism attack. Last month, Australians were also amongst 20 people killed by suicide bombers in Bali.

Nine people were killed in a bomb attack outside Australia's embassy in Jakarta in September 2004.

Australia has tightened checks on passports, increased jail terms and fines for identity fraud and put marshals on domestic and some international flights since the U.S. terrorist attacks on Sept. 11, 2001.

To contact the reporter on this story: Fergus Maguire in Canberra, Australia at fmaguire@bloomberg.net

Last Updated: November 2, 2005 00:22 EST