Interior Minister Johanna Mikl-Leitner told Ö1 radio that the aim is to speed up the removal of videos or pages which preach hate and promote groups such as Islamic State (Isis) and other militant organisations.
She added that if people spot videos or websites which they feel fall into these categories they should report them as soon as possible to the Interior Ministry. Google and YouTube will then assess the videos or pages and if they are deemed to contain extremist material they will be removed from the internet.
Mikl-Leitner said that this was a necessary step as jihadis had been actively recruiting teenagers in Austria via the internet.
A meeting of EU interior ministers in Brussels on Thursday will discuss anti-terrorism measures, including the Google and YouTube model.
With more than 300 hours of video uploaded to YouTube every minute, it is an impossible job to police content, so sites such as Google rely on the community of users to flag inappropriate content.
Information such as the IP address from which the video was posted is handed over to the authorities when asked for.