After meeting with the Australian Federal Police and domestic spy agency Asio, state police said additional “intelligence” led them to conclude the incident should be treated as a likely terrorist attack.
Commissioner Shane Patton said that prior to the fire, police had no information to suggest that arson was imminent.
He declined to release any further details on the investigation while it is ongoing.
Mr Patton’s statement came a day after Prime Minister Anthony Albanese described the incident as “clearly terrorism”, admitting that police had yet to make a decision. He called his description “a personal view.”
State Premier Jacinta Allan said on Monday the designation as a terrorist meant police would now have extra resources to investigate.
Jewish community leaders said they believed the attack was an escalation of a recent documented rise in anti-Semitism in Australia, and that it had heightened fears of violence.
Several worshipers were in the building at the time of the fire and described hearing a bang and seeing a window shatter before liquid was thrown inside and ignited.
“It all happened quite quickly,” synagogue board member Benjamin Klein, who spoke to witnesses, told The Age newspaper.
After officers were confronted by angry and frightened worshipers at the scene on Friday, Mr Patton said the police had focused on keeping them safe.
“We have additional police officers in areas where large numbers of Jews live and gather,” he said.
Alan also urged the city to unite with its Jewish communities.
“We cannot allow this conflict abroad to continue to be a cover for this kind of behavior.”