Federal authorities have decided to prevent Huawei Technologies of China from playing any active role in the $38 billion roll out of the national broadband network, citing internet security issues.

The move was made public by Attorney-General Nicola Roxon, who said in a statement that what was handed down on the Huawei matter was "consistent with the government's practice for ensuring the security and resilience of Australia's critical infrastructure more broadly."

In rejecting one of China's biggest telecommunications equipment manufacturers, the Australian government arrived at the decision with the guidance of the Australian Security Intelligence Organization (ASIO).

The country's intelligence agency, however, has opted to remain silent on the issue, Reuters said.

Prior to Roxon's announcement, Huawei was reportedly in the process of applying for a supplier contract in the multi-billion NBN project worth some $1 billion, according to the Australian Financial Review.

But in the same way that the Chinese has encountered troubles winning regulatory approval on its efforts to expand in the United States, Canberra appears to be taking the cue from its American counterpart.

Washington, tech experts, has been wary of Huawei's seemingly close ties with the Chinese government on the account that it founder and current chief executive, Ren Zhengfei, served as a military officer before putting up his telecom business.

Ren has dismissed suggestions that he enjoys considerable clout in Beijing but U.S. officials seemed to believe otherwise as numerous attempts by Huawei to gain considerable foothold in the U.S. market have been turned down.

Huawei has been gradually emerging as a top global telecommunications player, with network security specialist Cisco recently declaring that it views the Chinese firm as major competitor, Reuters wrote.

Huawei spokesman Jeremy Mitchell confirmed the news, saying in a statement that "we were informed by the government that there is no role for Huawei in Australia's NBN."

"While we're obviously disappointed by the decision (of Australia), Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology," Mitchell told ABC.

Mitchell also stressed that Huawei's corporate path was not dictated by Beijing and if such was the case "we would, that would be to our detriment and we would lose the market share that we have."

Former Foreign Minister Alexander Downer scored the government for using security issues in veiling the real reason why Huawei was blocked from participating in the NBN.

"This is just completely absurd. This sort of whole concept of Huawei being involved in cyber warfare, presumably that would just be based on the fact that the company comes from China," Downer, who serves in Huawei board, was reported by ABC as saying.

However, Prime Minister Julia Gillard has insisted that the decision only reflects the careful considerations of the Australian government before awarding contracts for the NBN roll out.

"You would expect as a government that we make all of the prudent decisions to make sure that the infrastructure project does what we want it to do, and we've taken one of those decisions," Ms Gillard was quoted by Reuters as saying while in South Korea attending the international nuclear security summit.