The organisation was listed as a prohibited hate group late on Thursday in the first use of the tough powers, Home Affairs Minister Tony Burke announced.
"There's a general acceptance from Australians that there is a level of hatred and dehumanising language that does provide a pathway for violence, even if it's not using the word violence," he told ABC radio on Friday.
It is now a crime to be a member of Hizb ut-Tahrir, to recruit for it, or to provide training, funds or support to the group.
The hate crime laws were pushed through after the December 14 terrorist attack on a Jewish festival at Bondi Beach, which killed 15 people and left more than 40 wounded.
Other countries that have banned Hizb ut-Tahrir include a number of Muslim-majority nations such as Egypt, Indonesia, Jordan, Pakistan and Bangladesh.
The group rejects democracy and secularism and calls for the establishment of an "Islamic state".
Terrorism researcher Levi West said Hizb ut-Tahrir's listing could drive members underground.
"It's a double-edged sword," he told AAP.
"The upside is the listing constrains the group's behaviour, but it comes at a cost as well."
Dr West, a research fellow at the Australian National University, said the listing did not address concerns there were a number of people who believed in the ideas that Hizb ut-Tahrir advocated.
"Responding to extremism is a difficult, complex challenge," he said.
Opposition home affairs spokesman Jonno Duniam accused Labor of "inaction" in its response to extremism.
"Hizb ut-Tahrir have advocated some of the most appalling and disgusting approaches to how society should work, and have done this in our suburbs with impunity," he said.
"They should have been shut down a long time ago."
Australia's gun rules were also tightened under the government's response to tackling anti-Semitism.
When the powers were legislated, the Albanese government indicated it planned to ban Hizb ut-Tahrir and neo-Nazis that were part of the National Socialist Network.
The National Socialist Network disbanded the day before the laws came into effect to avoid falling foul of them.
Welcoming the decision, the Australia/Israel & Jewish Affairs Council said the listing "is an important and necessary step in confronting the spread of extremist ideology that threatens social cohesion, public safety and the fundamental values of Australian society".
Mr Burke said Australia had only previously been able to ban groups if they went all the way in calling for violence and satisfied the definition of being a terrorist organisation.
ASIO director-general Mike Burgess previously said the two groups were falling just short of the definitions, but believed they were a real risk in providing a pathway to violence.
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