The chairman of the Australia and New Zealand Parliamentary Group in the UK has slammed Prime Minister Malcolm Turnbull for saying he would welcome the UK voting to remain in the European Union (EU).

Key points: Tory MP says it is in Australia's best interest for UK to leave EU

Tory MP says it is in Australia's best interest for UK to leave EU Alexander Downer says Australia already set to negotiate free trade with EU

Alexander Downer says Australia already set to negotiate free trade with EU Downer warns the UK leaving the EU could have a contagion effect

Conservative MP Andrew Rosindell, who also sits on the Foreign Affairs Select Committee, has told the ABC he believes Australia would never countenance signing away legal or political powers to its neighbours.

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"Come on Malcolm, when are you going to do your political union with Indonesia or Japan?" Mr Rosindell said.

"When are you going to have free movement with Asia? This is ridiculous."

In an interview with Sky News earlier this month, Mr Turnbull said in reference to the referendum that he welcomed "Britain's strong role in Europe".

"If the British people in their wisdom decide to stay in the European Union, then we would welcome that," he said.

Mr Rosindell, who is one of about 130 Tory MPs who want to leave the EU, said he could not understand why the Australian Government was backing the 'Remain' campaign.

"This is crazy, it's absolutely in Australia's interests that Britain leaves the EU, so that we can have free trade agreements, we can have more free movement, so we can work together," he said.

In Australia's favour for UK to remain inside bloc: Downer

But Alexander Downer, Australia's High Commissioner in London, disagreed with Mr Rosindell's assessment.

He said Australia was already set to negotiate a free trade agreement with the EU and there were free trade and security benefits from the UK remaining inside the bloc.

"It really is to our advantage to have a country that favours free trade and supports the sort of national security paradigm that we support at the heart of the EU," Mr Downer said.

"Because it keeps that group of 28 countries, which covers 500 million people, very much on the same paradigm as a country like Australia."

Mr Downer, who was Australia's longest serving foreign minister, said he feared if Britain left the EU there could be a contagion effect.

"We don't want to see the beginning of the breakup of the European Union," he said.

"As a bloc it helps to balance the power of Russia and it helps as a bloc to keep the European continent stable."

But Mr Rosindell and other Euroskeptics in the Conservative Party argued that the security argument had been exaggerated by proponents of the 'Remain' campaign.

Mr Rosindell said he had one final message for Australia's Prime Minister.

"Malcolm needs to listen to the British people on this issue and not necessarily take the line from Number 10 [Downing Street]," he said.

The British people will have their say at a referendum on June 23.