AUSTRALIA Post has been accused of secretly monitoring Sydney postal workers using computerised street-side red letter boxes in breach of NSW surveillance laws.

But the postal service says it is entitled to spy on its staff because it is not subject to state laws.

The NSW Attorney-General, John Hatzistergos, has intervened in the dispute and will appear personally in the Federal Court today to argue Australia Post is answerable to criminal prosecution under the state workplace surveillance act.

All street-side collection mail boxes in NSW are monitored by computer. Australia Post is able to track when and where each postie or driver accesses the boxes with individual computer keys.

The system was introduced as a measure to stop mail theft.