The Federal Government has called for allegations of pay TV piracy against Rupert Murdoch's News Corporation to be referred to the Australian Federal Police.

The Australian Financial Review has reported that News Corp engaged in corporate hacking and piracy in a bid to damage its pay TV competitors in Australia.

News Corporation is alleged to have used a security division known as Operational Security to encourage hackers to pirate the smart cards of rival pay TV operators including Austar and Optus, thereby draining them of revenue and devaluing the businesses.

The smart cards are inserted into set-top boxes to unscramble pay TV signals.

Communications Minister Stephen Conroy described the allegations as serious and called for them to be referred to the AFP.

"These are serious allegations, and any allegations of criminal activity should be referred to the AFP for investigation," a spokeswoman for Senator Conroy said.

News Corp has denied promoting piracy or sabotaging the commercial interests of its rivals.

An Australian Communications and Media Authority (ACMA) spokesman said "at this stage" the media watchdog was not investigating the allegations.

He said the pay TV industry had its own code of practice established under a co-regulatory regime.

ACMA monitors content but not issues such as piracy, the spokesman said.

The Australian Subscription Television and Radio Association, which develops the relevant codes of practice with ACMA, declined to comment when contacted.

Takeover bid

The allegations come as the competition watchdog is finalising its approval of a takeover bid for Austar by Foxtel, of which News Corp owns 25 per cent.

The Australian Competition and Consumer Commission is concerned the takeover would threaten competition in the industry.

On Tuesday, the BBC aired allegations that a News Corporation subsidiary, NDS, recruited a hacker to acquire the smart card codes of ITV's ONdigital, the biggest pay TV rival to News Corp's Sky TV network in the United Kingdom.

In a statement issued after the BBC aired its allegations, NDS denied it sabotaged the commercial interests of any rival and says it recruited hackers to track and catch other hackers and pirates.

A Foxtel spokesman confirmed the company had used external service suppliers, including NDS.

But he stressed there were no allegations of wrongdoing by Foxtel.

"Foxtel has always worked hard and spent significant amounts of money to combat piracy," the spokesman said in a statement.

"This has included running an extensive court case against pirates and working with the AFP, other subscription TV providers, including Austar, and advocating with government to enact effective laws to protect Australia's creative industries and legitimate consumers."

ABC/wires