Nagging national security concerns will likely see Chinese telecommunications giant Huawei blocked from taking part in the 5G mobile network.

Key points: Intelligence sources say Huawei is considered a cyber espionage risk to infrastructure like 5G

Intelligence sources say Huawei is considered a cyber espionage risk to infrastructure like 5G Government says blocking the company would be a "big deal", but Huawei says negotiations are ongoing

Government says blocking the company would be a "big deal", but Huawei says negotiations are ongoing Labor backbencher Michael Danby rejects Huawei's assertion it is independent, and wants it blocked from 5G discussions

Multiple sources in the intelligence community have told the ABC that Huawei is considered a cyber espionage risk to critical infrastructure.

Huawei, which argues it is independent from the Chinese Communist Government, was banned in 2012 from the National Broadband Network and lost a contract to build a communications cable between the Solomon Islands and Sydney after an intervention by spy chief Nick Warner last year.

Government sources concede blocking Huawei from the 5G network would be a "big deal", considering the company's deep involvement in the technology and its partnership with Optus and Vodafone on mobile phone networks.

This has not shaken intelligence and security agencies' anxieties about Huawei.

Those concerns are shared by senior figures in the Liberal and Labor parties.

And while security agencies are convinced Huawei should not be allowed to help build the network, there is some concern that Prime Minister Malcolm Turnbull, who in opposition was critical of Labor's decision to block Huawei from the NBN, might be wavering on the issue.

Blocking Huawei from the 5G network would aggravate tensions with China, Australia's biggest trading partner.

Federal Attorney-General Christian Porter said there was an ability to exclude companies from 5G on national security grounds.

"There's two relevant pieces of legislation: the Telecommunications And Other Legislative Amendment Act, and the Security Of Critical Infrastructure Act," Mr Porter said.

"So there is a process underway where decisions are made with respect to who can and cannot participate in that process, but it's just too early to say in that process what groups that might apply to."

Huawei involvement 'inappropriate': Labor backbencher

Labor backbencher Michael Danby said Huawei must be blocked from the 5G network and rejected the company's assertion it is more of a cooperative than a state-owned enterprise.

"What a load of tosh," Mr Danby said, stating Huawei officials had told parliament's intelligence and security committee some years ago that it reported to Beijing ruling political class.

Michael Danby ( ABC News: Matt Roberts )

"I'm not criticising them because all Beijing-based companies have to do that, but to say that they're just a commercial organisation and a workers cooperative is simply laughable.

"Who do these people think we are, fools?

"If a Chinese large company wants to try and build a fruit and vegetable exporting empire in the Ord and Fitzroy River, I'm less concerned about that than the electronic backdoor to Australia.

"Australia is a capital poor country, and we need Beijing based investment, and we certainly should be colour blind, and shouldn't respond to nationalist sentiment that Chinese investment should be barred.

"On matters like the electronic spine of Australia, the new 5G network which will control the internet of things — automatically driven cars, lifts, medical technology — I don't think it's appropriate to sell or allow a company like Huawei to participate."

US, British committees have also raised security concerns

Reports on Huawei by United States and British intelligence committees have raised security vulnerabilities with Huawei systems.

"The United States should view with suspicion the continued penetration of the US telecommunications market by Chinese telecommunications companies," the US Permanent Select Committee on Intelligence reported in 2012.

"US government systems, particularly sensitive systems, should not include Huawei or ZTE equipment, including component parts.

"Similarly, government contractors — particularly those working on contracts for sensitive US programs — should exclude ZTE or Huawei equipment in their systems."

A redacted report by the British Parliament's Intelligence and Security Committee said that national security concerns were inadequately weighed when it came to awarding Huawei the contract to supply transmission equipment in a major upgrade of the UK telecommunications network.

"The Government's duty to protect the safety and security of its citizens should not be compromised by fears of financial consequences, or lack of appropriate protocols," the ISC committee found in 2013.

The Australian Government is introducing a foreign agents list whereby companies and individuals will be able to self-declare as foreign principals or agents or foreign principals.

But the new regime would allow the Government to declare companies or individuals under the list.

"There's no stigma attached to being on the register. There's no problem with people being engaged by foreign principals to change opinion in Australia or affect a government or democratic outcome," Mr Porter said.

"That happens with some regularity. But what we're saying is it should happen transparently and with full disclosure about the relationships."

Huawei Australian chairman John Lord said his company remained in discussions with the Government over 5G.

"We're getting a very receptive ear as we put forward how 5G works … we're getting welcomed as we continue to talk to government in an open way," Mr Lord said.

"Government officials have raised no real concerns other than to seek more information from us about the way 5G is being formed, similarities to 4G, how Huawei intends to take 5G forward.

"So we're not really getting any concerns expressed to us in any way at all other than reports in the media."