A push to expand the powers of the country's cyber spy agency to collect intelligence on Australians is being backed by Home Affairs Minister Peter Dutton.

Key points: Secretaries of Home Affairs, Defence have discussed giving Australian Signals Directorate more powers

Secretaries of Home Affairs, Defence have discussed giving Australian Signals Directorate more powers Proposal would enable ASD to conduct "penetration tests" on Australian companies without their permission

Proposal would enable ASD to conduct "penetration tests" on Australian companies without their permission Peter Dutton stressed need to be aware of cyber threats with both domestic and international bases

The controversial idea to restructure the Australian Signals Directorate (ASD) is strongly opposed by some in Cabinet who argue it is not necessary.

The ABC understands Home Affairs secretary Mike Pezzullo and Defence secretary Greg Moriarty have discussed giving ASD a domestic role with three elements.

Firstly, ASD's unrivalled ability to shut down computer systems — a so-called "cyber effects" power — could be used within Australia, targeting organised criminals, terrorists and child pornographers.

ASD would also be allowed to conduct covert "penetration tests" on Australian companies to test their cyber security and vulnerability to hacker attack.

Such tests are already conducted on companies with their express permission.

Thirdly, ASD would be given coercive powers to enable the agency — which becomes an independent statutory body on July 1 — to direct companies and government agencies to improve their cyber security.

Intelligence agencies are prioritising making sure that critical infrastructure is impervious to ever-more sophisticated malicious cyber attack.

The agencies believe that infrastructure like telecommunications, banks, health, energy and insurance networks need to be protected from hidden weaknesses that could be exploited.

Dutton says there is a case to be made

Asked about the push to give ASD more powers to investigate cyber threats on Australian soil, Mr Dutton said there was a case to be made for it, with appropriate safeguards in place.

"There is the need for us to meet that threat … including obviously a look at the capacity of ASD," he said.

Mr Dutton said any suggestion the proposal would pave the way for wholesale spying on Australian citizens was "complete nonsense".

However, the Home Affairs Minister stressed the need to be aware of cyber threats and sophisticated criminal syndicates with both domestic and international bases.

"If we had a capacity to disrupt, for example, the live streaming of children that were being sexually exploited, would we explore ways that we do to that within the law? Of course we would," Mr Dutton said.

Labor said political infighting within the Government was interfering with important national security policy.

"There is no room for confusion in an area as important as national security. There is certainly no room for freelancing from Peter Dutton," Shadow Attorney-General Mark Dreyfus said.

"So, who is right? Peter Dutton, or Mike Pezzullo, or Julie Bishop?

"And why on earth are they saying different things about whether a proposal to expand the powers of the Australian Signals Directorate even exists?"

Bureaucrats against expanding cyber agency

Inside the federal bureaucracy there is considerable resistance to expanding ASD's role.

Under legislation, the Australian Security Intelligence Organisation (ASIO) and the Australian Federal Police (AFP) are allowed to seek assistance from ASD in conducting investigations on Australian citizens and businesses.

Over the weekend the secretaries of Defence, Home Affairs and the ASD issued a joint statement rejecting suggestions a formal proposal had been made to restructure ASD.

"[ASD's] cyber security function entails protecting Australians from cyber-enabled crime and cyber attacks, and not collecting intelligence on Australians. These are two distinct functions, technically and operationally,'' the secretaries said.

On Sunday, Foreign Minister Julie Bishop also denied there was a plan to increase the powers of the directorate and when asked whether there should be, said no.

"The current laws safeguard the privacy of Australians but also provide us with an opportunity to keep Australians safe," she said.