Prime Minister Tony Abbott has been hit by another embarrassing leak from within his party, forcing him to deny a media report he came up with a plan to unilaterally invade Iraq with a force of more than 3000 Australian troops to confront Islamic State.

As Mr Abbott and cabinet colleagues Joe Hockey and Mathias Cormann denounced the report on Saturday, its existence confirmed there are still people very close to Mr Abbott willing to leak information against him following this month's defeated leadership spill.

Earlier in the week Fairfax Media reported that senior government sources were dismayed at Mr Abbott's intervention on Myuran Sukumaran and Andrew Chan, believing they were making progress before he angered the Indonesians by linking it to Australian tsunami assistance.

During a terse media conference in Darwin on Saturday, Mr Abbott denied the report, which claims he suggested to "leading military planners" in a meeting on November 25 that Australia deploy 3500 ground troops to take on Islamic State in Iraq without any international backing.