Australian intelligence authorities are reporting a major increase in cyber-espionage attacks from abroad and fear the consequences could be devastating.

Hacking attempts are now so frequent that entire teams work around the clock to repel attacks on sensitive Government departments.

Professor Alan Dupont, a defence and security expert at the University of New South Wales, says the bottom line is that spies are trying to get Australia's electronic secrets.

"The incidence of penetration of our cyber-walls here in Australia have gone up astronomically over the last five years," he said.

"You're probably seeing maybe 400 to 600 per month, at least, trying to penetrate the firewalls of the Department of Defence and other national security agencies."

One former Defence staffer hired to repel cyber attacks says genuine hacking attempts are made on the Defence network at least 20 times every day.

But the risk to big business is of equal concern, as hackers and even foreign governments try to steal Australia's valuable commercial secrets.

Last summer Sydney businessman Sulieman Ravell's financial services website was attacked from abroad. Thousands of computers bombarded his site until it collapsed.

"In effect it's actually like having a shop on a high street, and somebody coming and dumping several tonnes of dirt outside your shop," he said.

"Nobody's actually broken in, nobody's actually stolen anything from you, they've just stopped you from operating.

"Then eventually, someone comes and says, look, we're going to keep doing this until you give us some money."

In his case the attacks came from infected computers all over the world but originated in Russia.

Mr Ravell said an extortion demand followed, asking for money in return for ending the attack.

"Initially it started off small, but we ended up with over 17,000 different IP addresses hitting us and several million hits," he said.

"So you can imagine how they clogged us up with our service."

Offshore attacks

Several other financial companies were hit at the same time, and that is when a team of Government responders kicked in.

The Computer Emergency Response Team, CERT Australia, operates from the Attorney-General's Department in Canberra and helps the nation's biggest businesses ward off online attacks.

CERT Australia's executive director Carolyn Patteson says the organisation was able to get data about the attacks from one of the businesses that fell victim.

"In analysing that data it became clear that the attack was actually originating offshore," she said.

"So we reached out through our international partnerships, so one of our international CERTs, and asked them to help take down the attack by taking down the command and control server which stopped that particular aspect of the attack."

CERT Australia has clocked a serious increase in hacking attempts on Australian businesses.

"What we have seen over the last year is an increase in the number of incidents, about 5,000 in the last year alone, which is about 130 a week," Ms Patteson said.

The incidents come in many forms, including malicious software and denial of service attacks designed to bring a website down.

Ms Patteson says in the past few years there have been more of what they would call socially engineered emails.

"So someone gets sent an email, it's on a topic they are interested in, it's current and it entices them to open the email," she said.

"Once they open the email, malicious software gets a foothold on their network and then sits there waiting for instructions."

The result is a scandal that has been labelled the greatest transfer of wealth in history, as hackers steal commercial secrets, and most damaging of all, intellectual property, a private company's most protected and valuable information.

"The loss of intellectual property is the biggest problem arising from all of this," Professor Dupont said.

"Even beyond the loss of defence secrets, serious as they are, the loss of our intellectual property as a country means that over time it will erode our competitiveness against other countries and that's the real issue."

State-sponsored hacking

Admiral Dennis Blair was US president Barack Obama's director of national intelligence until 2010.

He warned the White House of the risks of a major cyber-security breach, and he believes much of the threat originates in China.

"China has a combination of activity and skill which really makes them the greatest participator in this," he said.

"A Chinese company, like a Chinese military unit, can go to a computer unit at a Chinese university and say, 'Here, I want to find out this information and I'll pay you for it'.

"And hackers do both in China and that's something that's going to cause trouble down the line and China needs to get on top of it."

Few argue about the extent of the cyber-espionage threat, and that much of this is state-sponsored hacking is also in little doubt.

Former intelligence analyst Paul Monk dismisses Chinese denials on the issue.

"We see this massive, very intrusive, very sophisticated cyber-espionage taking place, more or less certainly based in China," he said.

"So the idea that somehow the key people in the ministry of state security or PLA (People's Liberation Army) or various other arms of the Chinese government are somehow oblivious is simply not credible."

In business and in government online spying and sabotage is only likely to get worse.

"If I were an Australian company or had a position in the Australian Defence Forces I would consider myself a target and make sure I had darn good security," Admiral Blair said.