Australian researchers have pinpointed a key cause of type 2 diabetes, in a study they say has brought them closer to developing a simpler, more effective treatment for the disease.

The scientists at Sydney's Garvan Institute say their discovery is a major step forward in the treatment of the disease, which affects about 7 per cent of Australia's population.

The team has identified an enzyme in diabetics as the active agent that blocks the production of insulin, which is a hormone that helps the pancreas convert blood-sugar into energy.

Current treatments try to control insulin levels but do not address the reasons why insulin production is failing.

But the team's leader, Trevor Biden, says the next step will be to work with pharmaceutical companies to develop a drug to block the enzyme, known as PKCepsilon, allowing cells in the pancreas to function normally.

"What we've identified is a target that we can now latch onto to get therapy, but the journey from target to tablet of course is a long one," he said.

"It's probably going to take another 10 years at least to get something that's effective in humans."

Study

In their study, the researchers used genetically modified mice to observe the link between an oversupply of fat and type 2 diabetes.

They found mice without the enzyme did not develop diabetes, despite gaining weight on a high-fat diet.

In a statement, Garvan Institute researcher Dr Carsten Schmitz-Peiffer says the discovery is groundbreaking.

"What this tells us is that we will be able to protect people at high risk of developing diabetes from losing the ability to produce insulin ..." he said.

"It's like slotting in a critical part of a jigsaw puzzle, a part that suddenly makes the whole picture much clearer."

Around 200 million people worldwide suffer from type 2 diabetes, which is often linked to obesity.