The recently retired Defence head Dennis Richardson has said Australia should carry out its own "freedom-of-navigation" naval operation to challenge China's claim over waters surrounding artificial islands in the South China Sea.

Such a move would provoke an angry response from Beijing, but Mr Richardson, who has been a central figure in Australia's security and foreign affairs establishment for the past two decades, said Australia should not tacitly accept the legitimacy of China's man-made territory in the strategically vital waterways.

The USS Dewey conducted a "man overboard" exercise near Mischief Reef on Thursday. Credit:Wikimedia commons

Asked whether Australia should carry out a naval freedom-of-navigation operation, Mr Richardson said: "I think at some point, we should ... What that point is, being a good old public servant, I'd leave it to the government."

The remarks are highly significant in that they come from such a senior and recently retired national security figure. Mr Richardson also led ASIO and the Department of Foreign Affairs and served as ambassador to Washington. He retired just over a week ago after a 48-year career.