Fairfax Media has been told a submission was made to Australian Federal Police in 2011, which identified Khayre's extremist views, propensity for violence and isolation from family and community.

It is understood the proposal was rejected by the AFP, which decided against referring the troubled young man to one of several Victorian programs designed to counter Islamic extremism and mitigate public risk.

It is as yet unclear why the proposal was rejected, although it is believed the AFP no longer wished to work closely on Khayre after his acquittal in 2010.

That decision precluded Khayre from participating in another deradicalisation study run by the Global Terrorism Research Centre at Monash University, which receives funding from the Australian Research Council and is backed by the the Australian Federal Police.

An AFP spokeswoman denied it received a proposal for Khayre to undergo any deradicalisation program. The AFP said deradicalisation was a matter for states and territories.

Police killed the 29-year-old in Brighton on Monday night after he killed a man, took a woman hostage, and wounded three Special Operations Group officers on Bay Street.

The deadly siege has raised concerns about the accessibility of deradicalisation programs and why Khayre was not under closer scrutiny by law enforcement agencies

In 2010, Khayre was acquitted over his role in a plot to attack the Holsworthy barracks in NSW, after serving 16 months in a high-security unit at Barwon Prison.

During the Operation Neath investigation of the planned terrorist attack, Khayre was asked what he understood by the term "jihad".

The Somali-born refugee, who returned to his homeland in 2009 to train with terrorist organisation al-Shabaab, responded: "To die in the path of God".

A source familiar with Khayre said there was "absolutely no doubt" he was a jihadist in the making, but claimed he was not beyond redemption.

"Jihad was like a jacket he wore, but it wasn't really him ... things could have been turned around."

A legal source, who had also met Khayre on several occasions, expressed concern he was not considered for a deradicalisation program upon his release from prison.

"It was an opportunity missed. He had plenty of problems, mostly the drugs, but he seemed like a young guy who was easily led. And he could have been led in another direction," the source said.

In Parliament this week, Corrections Minister Gayle Tierney said there were up to 22 current and former prisoners taking part in an anti-radicalisation program.

Victoria Police would not comment on the specifics of the program but confirmed 22 people were currently participating, none of whom are on parole.

"Yacqub Khayre was the only participant on the program who was a parolee. However, given the incident in which he was involved is now subject to coronial investigation, we are not able to comment further," a spokeswoman said.

The Community Integration Support Program (CISP) has been operating in prison for the past seven years in a bid to moderate the extremist views of violent criminals convicted of terror-related offences.

It was set up in the wake of Operation Pendennis, established to investigate a terror plot led by Abdul Nacer Benbrika, and Operation Neath, established to investigate the plot targeting the Holsworthy Barracks in Sydney for which Khayre was acquitted.

Run by Victoria Police and the Islamic Council of Victoria, there are about two dozen criminals going through CISP. The Andrews government this year allocated almost $6.4 million over the next four years to the program, although the Islamic Council of Victoria announced on Wednesday it was scaling back its involvement.

"We've been involved to this point, but we've decided not to go into the next phase of CISP because it is expanding," said vice president Adel Salman, adding that ICV runs a separate chaplaincy program for Muslim prisoners.

"Tackling extremism of any form - absolutely we support that, but we feel now is the right time to refocus our efforts."

It is understood the refocused CISP will also target people suspected of holding extremist views who have not been in prison.

Deakin University counter terrorism expert Greg Barton said authorities needed to consider how to engage with young people who were held on remand and had not been convicted of crimes.

"Since CISP was set up we've seen a change in the landscape," Professor Barton said. "We're seeing lots of young people, including many teenagers, in remand when they're charged with terrorism offences.

"One of the issues in this area is, what happens on remand? Because, particularly when it comes to younger people you especially hope there is some intervention at that early stage, but there is various reasons why that's hard.

"It's not a great environment ... it would be a good place to have some intervention."

Professor Barton said there also needed to be better information sharing between state police, ASIO and the AFP, especially when there has been a history of extremism.

The Somali Australian Council of Victoria has run its own youth deradicalisation program since 2015 for people aged up to 25. Secretary Hussein Haraco said Khayre was too old to be involved and had not been flagged as at-risk.

"We've got good resources from the government and we're doing our best," Dr Haraco said.

He said he had not personally met Khayre, who had little contact with the community, but that the deradicalisation program had been working for Victorian youths.

"When I talked with the youth this morning they were distressed because of what happened with Yacqub and the consequences. They said it's on us now, and it's really very bad for us as a community."