Australia is boosting its counter-intelligence capabilities after it discovered that China is establishing a large cover information network in leading Australian universities.

The Sydney Morning Herald reports that Chinese intelligence officers have confirmed the existence of a spy network at Sydney University and Melbourne University to protect the core interest of Beijing.

Over 90,000 Chinese students from mainland China are studying at the two Aussie universities whom the Chinese government wants to protect from exposure to ideas and activities different from their situation in China.

As a result of the covert operations, some Chinese students told Fairfax Media that have suffered the consequences of the classroom comments which were reported via the Chinese intelligence channels. A senior lecturer at a top Australian university admitted being questioned four times in China by authorities over a remark he made about democracy at a University of New South Wales seminar.

The Australian Security Intelligence Organisation (ASIO) admitted that China's spy network has more resources at Sydney University that the agency.

The Chinese spy network include electronic espionage capabilities that have penetrated Australia's biggest companies, senior politicians and ASIO's headquarters in Canberra, causing the office to remain unopened.

The network operates in Australian universities through education counselors from Chinese diplomatic missions who organise foreign student associations that provide support services to the exchange students.

Besides spying on students, the well-funded Chinese student associations also welcome leaders at the airport, block protest groups from sight and collect information.

In response to the Fairfax report, a spokeswoman for Sydney University said in a statement, "The University of Sydney has no specific knowledge of the claims in the Sydney Morning Herald today, but is vigilant to protect the academic freedom of its staff and students."