China has gained "effective control" over the South China Sea and is using "psychological warfare" in its quest for territorial expansion, according to a new study which urges the United States and allies to do more to push back.

Key points: Australia, US's current policies failed to strongly challenge Beijing's "adventurism," report says

Report author argues Australia's Government must take stronger action in response

Australian officials have been briefed on the contents of the report

The joint Australian and US report concludes current policies have failed to strongly challenge Beijing's "adventurism" and suggests options for the new Trump administration to help free up the strategic waterways.

According to the Washington-based Centre for Strategic and Budgetary Assessments, China has "by far the largest military, coastguard, and maritime militia presence in the region — they are deploying strong surveillance, anti-air, anti-shipping, and strike forces onto the artificial islands they occupy — and they are actively intimidating other parties in the area".

Report author and former senior Australian Defence Department official Ross Babbage argues the Federal Government must take stronger action in response.

"Our northern approaches are becoming much more questionable," Professor Babbage told the ABC.

"Ever since the Second World War we've assumed the United States and its close allies have really dominated the maritime environment — I'm afraid that's really no longer the case."

The report, titled Countering China's Adventurism in the South China Sea, also details how China is conducting "psychological warfare" on the United States and its allies to undermine the willpower of so-called "decision-making elites".

"They're conducting information operations and spreading disinformation, they're fostering pro-Beijing groups in allied countries, they are of course paying for Chinese media supplements from the People's Daily," Professor Babbage said.

"You've got Confucius Institutes which are Chinese-funded by the Chinese Education Department in 10 universities in Australia and on top of all that we're seeing Chinese intelligence operations in allied countries, including Australia, being pretty active."

US, allies' current diplomatic approach has 'failed'

The ABC has learned that over the past week Australian officials, including senior military leaders, have been briefed on the contents of the report and particularly on what the findings might mean for this country under a Trump presidency.

"Australia certainly has demonstrated a willingness to do a lot, but a willingness to do more, I think, would be a very powerful signal in Washington in this time of transition to the new administration," Thomas Mahnken, the president of the Centre for Strategic and Budgetary Assessments, argued.

The 70-page report by the bi-partisan Washington-based think tank finds China has been taking advantage of the Obama administration's overly cautious approach to make substantial progress toward its goal of pushing Western forces and strategic influence out of the South China Sea and most of the Western Pacific.

"In consequence, an important question for the Trump administration is how the United States and its close regional allies — primarily Japan and Australia — can thwart Beijing's expansionism," it said.

Professor Babbage argues Australia should now consider conducting its own "freedom of navigation" operations within 12 nautical miles of contested islands in the South China Sea, but stresses the measure cannot be taken in isolation of other actions.

He warns the current diplomatic approach of the US and its allies cannot continue.

"The truth is that policy has had no significant effect on what the Chinese have done," Professor Babbage said.

"It hasn't stopped them and whether you know the United States and Japan and Australia, all the allies have pretty well said the same thing — the truth is, it has failed".