Legislation which would enable the home secretary to designate some state-linked organisations such as Iran's Islamic Revolutionary Guard Corps (IRGC) as a threat to national security could come into force as early as next month.
The National Security (State Threats) Bill was introduced to Parliament on Tuesday, and could become law within weeks.
It would allow Shabana Mahmood to designate groups involved in "foreign power threat activity" such as assassination attempts, surveillance and sabotage.
The bill also creates three new criminal offences, including one of supporting a designated state threat organisation and two of assisting and accepting material benefit from such a group.
The legislation was suggested by the government's Independent Reviewer of State Threats Legislation Jonathan Hall KC, when he concluded that it was difficult to ban state-linked groups like the IRGC as terrorist organisations.
In the last year, men have been convicted of spying on Hong Kong dissidents in the UK on behalf of China, carrying out an arson attack on a Ukrainian warehouse on behalf of the Russian group Wagner, and stabbing an opposition journalist in Wimbledon on behalf of Iran.
In those last two cases, the people who carried out the attacks were criminals who were doing it for money.
These cases showed that often hostile foreign powers were not only using their intelligence agencies to undermine security in the UK, but were also hiring criminal proxies through other state-linked organisations such as the Wagner Group and the IRGC.
It meant that the National Security Act 2023, which focused on foreign intelligence services, was quickly out of date.
Prime Minister Sir Keir Starmer said: "Where foreign states are found to be engaging in activity that threatens lives or undermines our democratic institutions, we must ensure that such actions have consequences.
"We will not tolerate hostile actors paying petty criminals to do their dirty work."
Mahmood said: "Foreign states are becoming ever more aggressive – attacking our communities, our way of life, and our institutions – and hiding their tracks behind proxies.
"We must adapt to keep pace."
The bill is seen in Whitehall as a vital upgrade of the National Security Act which was only passed three years ago.
Officials say they have been seeing unprecedented levels of threat from people and groups working on behalf of foreign states.
The Director General of MI5, Sir Ken McCallum, said the security service had "tracked more than 20 potentially lethal Iran-backed plots" in just one year.
The prime minister and home secretary fast-tracked the legislation after recent attacks on Jewish targets.
Several of those were claimed by a new group calling itself Harakat Ashab al-Yamin.
The IRGC was set up after the 1979 revolution to defend the country's new Islamic system, but has since become a powerful arm of the state with a reach beyond Iran's borders.
In the impact assessment accompanying the bill, it is anticipated that 10 or fewer organisations will be designated as state threats in the first year after the legislation is passed.
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