THE Gillard government has made an extraordinary intervention in an official tender process to stop Sky News Australia, partly owned by Rupert Murdoch, winning a $223 million contract to broadcast Australia's overseas television service.

An aggressive bid to expand Australia's presence in China helped push Sky News over the line in a fierce contest with the ABC to win the rights to the station, known as Australia Network.

Rupert Murdoch ... Sky News is facing government opposition. Credit:Reuters

An independent panel of public servants set up to evaluate the competing tenders saw Sky as the better bid - only for the government to baulk at stripping the contract from the publicly funded ABC to hand it to a company part-owned by News Ltd, Channel Seven and the Nine Network.

Labor then made late changes to the rules of the tender, sidelining the role of the independent panel and throwing the legitimacy of the process into doubt.