Australia's largest live sheep exporter Emanuel Exports has had its export licence suspended by the Agriculture Department.

The department sent a show-cause notice to Emanuel Exports last month, and it is understood the company responded with a 30-page statement.

Pictures of dead and heat-stressed sheep aboard an Emanuel Exports shipment to the Middle East sparked public outrage earlier this year and led to a government inquiry into the export trade.

"The laws that regulate the export of livestock include strict requirements to ensure the health and welfare of animals," the Agriculture Department said in a statement.

"It is the responsibility of each exporter to ensure it meets those obligations. The department takes those responsibilities very seriously.

"It is not appropriate for the department to provide more information while the investigation is ongoing.

"Further information will be released following a full review."

The company said in a statement on Friday night: "Emanuel Exports will cooperate fully with the Department in its review."

It said it exported "well in excess of one million sheep per year to the Middle East".

The RSPCA's Dr Jed Goodfellow said: "This is another step toward the inevitable end of cruel, long-haul live sheep exports."

"We have long said that if the laws were enforced, live export would become impossible. This is evidence of that.

"Emanuels is not the exception.

Footage of sheep on board an Emanuel Exports shipment sparked outrage earlier this year. ( Supplied: Channel Nine )

"What we saw in the 60 Minutes footage included routine conditions across multiple voyages. This is what long-haul live sheep export looks like, and it must not continue.

"Now is the time for Government to put the best interests of Australian sheep producers and animals first, to provide certainty for the future, and legislate for an orderly phase-out."

The Australian Livestock Exporters' Council (ALEC) told the ABC it was still absorbing the announcement and its implications for the $250-million-a-year industry.

ALEC CEO Simon Westaway said Emanuel Exports was working with regulators to determine what it could do to get the suspension lifted.

The news is the second body blow this week for the industry.

Another major export player, Livestock Shipping Services, said on Wednesday it would redirect ships to South America while it reviewed the commercial viability of operations in Australia.

This follows proposed new rules which would reduce the number of sheep on ships by 28 per cent.