Australian Prime Minister Tony Abbott foreshadowed tighter immigration controls on Sunday when he released the first report into a siege last December in Sydney's Lindt cafe, in which two hostages and the gunman were killed.

The legal system "had let the country down," Abbott said, almost 10 weeks after Iranian refugee Man Haron Monis walked into the cafe to hold 18 hostages at gunpoint during a 17-hour siege and bring Australia's largest city to a standstill.

The joint federal and state government report found that all decisions authorities made in relation to Monis were reasonable under current laws, though it recommended changes to conditions for immigration, citizenship and bail.