A horse stud in the Northern Territory has started breeding miniature mules, which is a win for boosting numbers of the rare animal and a win for cuteness.

Created by crossing a miniature donkey with a miniature horse, the animals are the size of handbags when born.

Rashida Khan, from Red Rocks Stud, south-east of Darwin, says her mini-mules don't grow more than 84 centimetres high.

"I've always been interested in mules and the opportunity came up to buy a miniature jack donkey and we were excited to have him and thought we'd experiment," she said.

"In five years we've managed to breed seven of these miniature mules and we're very proud of our babies."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 3 minutes 12 seconds 3 m 12 s Rashida Khan showing off her team of mini mules ( Matt Brann ) Download 1.5 MB

Ms Khan says the business is busy trying to build up numbers to meet demand.

"We've had a lot of enquires from people looking for something for their kids to ride," she said.

"But people also want them for livestock guardians, for therapy work and even as a friendly lawnmower."

The Top End of the Northern Territory is not known for commercial horse breeding, let alone the miniature kind, but Rashida Khan says the mini-mules handle the conditions beautifully.

"They're not fazed at all by our fluctuating weather," she said.

"Even with their nice little fluffy coats, mules are bred to be tough and these guys certainly epitomise that."