A former assistant secretary at Australia's defence department, Ross Babbage, said Singaporean intelligence has been implicated in "not just one or two instances that have occurred in the last 20 years, it's a whole series of instances."

But the allegation, made on a television programme in which Australian defence experts queried Singapore Telecommunication's (SingTel) bid for Cable and Wireless Optus, was rejected by Singapore officials.

"In response to press queries on the Australian Broadcasting Corporation programme Lateline, a ministry of foreign affairs spokesman said that the allegations were absolutely baseless," the foreign ministry said in a one paragraph statement.

Australian Defence Minister Peter Reith sidestepped the allegations, telling journalists he was "satisfied" with the security safeguards agreed to by SingTel.

The minister refused to confirm or deny the presence of Singaporean spies in Australia because "obviously we don't comment on a lot of intelligence matters which you read in the press".

An analyst from the Australian National University, Des Ball, said allowing the US$8.7 billion takeover to proceed would hand Singaporean defence and commercial intelligence operatives an "open book".

But Reith dismissed fears national security would be jeopardised if Singapore Telecommunications took over Optus, Australia's second biggest carrier.

"I have the very best advice available to me and defence is satisfied with the arrangements we have put in place," he said.

Optus and the Australian Defence Force are partners in a $500 million dollar (US$255 million telecommunications satellite due to be launched next year, while the Singapore government has a majority stake in SingTel.