Australia's biggest media organisations have challenged national security agencies to demonstrate when public interest journalism has damaged the country's safety, while arguing for a loosening of strict laws they believe threaten democracy.

Media companies and lobby groups pushed for a change in treatment of public interest journalism under national security rules and argued that responsible news outlets should be exempt from some penalties at a public hearing of a federal parliamentary inquiry into press freedom in Sydney on Tuesday.

Nine chief executive officer Hugh Marks (left) and ABC managing director David Anderson (right) at the press freedom inquiry on Tuesday. Credit:Peter Rae

News Corp director of corporate affairs Campbell Reid said the legislation had been drafted with the assumption that media organisations were "cavalier" when publishing.

"I would ask the agencies ... where can they point out the actual tangible example of a responsible news organisation, such as represented here, having done the wrong thing, or risked a national security organisation, or put a soldier or a policeman's life in danger?" Mr Campbell said.