Scott Morrison has launched a spirited defence of embattled Liberal MP Gladys Liu, hitting out at Labor in Federal Parliament for implying she was "disloyal" to Australia following a string of revelations about her past associations to Chinese groups.

The Prime Minister accused the opposition of "casting a smear on Chinese Australians", after it questioned whether the Morrison government had received warnings from Australia's spy agency about the Victorian backbencher.

Gladys Liu appeared to wipe away tears on Thursday. Credit:Alex Ellinghausen

Ms Liu broke down during the exchange in Question Time, wiping her face with a handkerchief as Mr Morrison went on the attack.

"Just because someone was born in China doesn't make them disloyal," Mr Morrison told Parliament.