Defence has confirmed that three Australian soldiers have been killed by a man in an Afghan army uniform in another 'green on blue' attack at a base in the south of the country.

Acting Defence Minister Warren Snowdon confirmed the deaths this morning and said another two Australian soldiers had been wounded in the incident, which took place last night in Uruzgan Province.

"Three Australian solders have been killed as a result of a green on blue incident and two have been injured," he said.

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"This happened at around 10:30pm on Wednesday evening in Afghanistan at a base. I'm unclear as yet as to the circumstances of it."

Prime Minister Julia Gillard has cancelled a meeting with Cook Islands prime minister Henry Puna to be briefed on the incident.

Opposition Leader Tony Abbott called it a "terrible tragedy" and a "black day for our Defence Forces".

Earlier, the International Security Assistance Force said three soldiers died when "an individual wearing an Afghan National Army uniform turned his weapon against International Security Assistance Force service members" in Uruzgan on Wednesday.

What are 'green on blue' attacks? Attacks on the coalition forces fighting in Afghanistan by their counterparts in the Afghan National Army are known as 'green-on-blue' or 'insider' attacks. The name 'green-on-blue' comes from the colour-coding system the US military uses: - "friendly" NATO forces are known as 'blue' personnel; and - "host nation" Afghan personnel are identified as 'green'. These attacks have increased markedly over the past two years, with estimates suggesting they account for 14 per cent of casualties among coalition forces in 2012. Last year, four Australians were killed and 10 were wounded in three separate attacks by Afghan troops.

"The incident is currently under investigation," an ISAF statement said.

Around 1,500 Australian soldiers are in Uruzgan as part of the ISAF force.

The number of so-called 'green on blue attacks' - where Afghan soldiers turn their guns on their Coalition colleagues - has jumped this year.

Forty-five Coalition troops have been killed so far, already more than the 2011 total.

Last year four Australians were killed and 10 were wounded in three separate attacks by Afghan troops.

The assaults have troubled the international force, which has portrayed its partnership with Afghan troops as the key to a planned withdrawal of foreign combat troops over the next two years.

The commander of NATO forces in Afghanistan, US General John Allen, said last week the causes of the surge in insider attacks are varied, and that Taliban infiltration only accounts for about a quarter of the incidents.

Why are green-on-blue attacks in Afghanistan on the rise?

Sorry, this video has expired Retired Major General Jim Molan explains why green-on-blue attacks are on the rise in Afghanistan.

Retired Major General Jim Molan says Western forces face a very complicated situation as they move towards withdrawal from Afghanistan, with "extraordinary" tensions emerging across the country.

But he writes that Western forces have no choice but to continue working closely with their Afghan counterparts.

ABC/AFP