Attorney-General Mark Dreyfus says a rise in far-right groups displaying Nazi symbols is a cause for concern, as the government moves to implement a nationwide ban.

New laws will mean people displaying Nazi insignia face up to a year in jail, while selling Nazi memorabilia will also be made an offence and will be banned in retail and online stores.

However, the Nazi salute will not be banned, because it would fall under the jurisdiction of states and territories.

Mr Dreyfus said it was concerning there were small numbers of people still showing the symbols.

“There’s been a rise in this far-right violent activity … we’ll send a message [that] this spreading of hatred and violence and anti-Semitism has no place in Australia,” he told ABC TV on Thursday.

“It’s concerning it’s crept a little bit into the life of our country.”

Mr Dreyfus said state and territory police would be better equipped for dealing with the Nazi salute.

The new law will be introduced to federal parliament next week.

The legislation outlaws only the two Nazi Hakenkreuz and Schutzstaffel symbols.

Displaying symbols for religious, educational or artistic purposes will be among a range of exclusions from the ban.

It will not affect the use of the swastika for people observing Hinduism, Buddhism and Jainism.

Mr Dreyfus said while the number of neo-Nazis was small, there was an increase in activity.

“This is a very small number of people, I’m hoping it’s getting small and it will eventually disappear,” he said.

“The director-general of security, the boss of ASIO, has talked about this over the last three years in each of his annual state-of-the-nation security reports, and it’s concerning and we’re acting.”

Labor MP Josh Burns, who is Jewish, said recent demonstrations of the Nazi salute outside Victorian parliament showed the need to act on the laws.

“To see the displays in our city and outside our parliament of these neo-Nazi thugs, parading with a sort of renewed brazen confidence, was really confronting,” he told Sky News.

“What has happened since is the governments around the country have really been galvanised into finding the laws and ensuring that this sort of brazen display of neo-Nazism can’t happen in Australia.”

Anti-Defamation Commission chair Dvir Abramovich said the federal laws would make significant steps.

“This ban will be a resounding triumph for justice and a thunderous blow to the solar plexus of a resurgent neo-Nazi movement that will now realise that the law is no longer on its side,” Dr Abramovich said.

“Although our work is not done, this is one more step forward in protecting the wells and foundations of democracy, our cherished way of life and our country.”

Executive Council of Australian Jewry chief executive Peter Wertheim said while the body welcomed the move, it had expressed concern to Mr Dreyfus that neo-Nazi groups will get around the legislation by using other symbols, including the death’s head and sun wheel.

“We have urged the government to review the legislation periodically so that if our concerns are borne out, the prohibitions may in due course be extended to the display of other Nazi symbols,” he said.

-AAP