The milk controversy sparked by the price war between Australia's major supermarkets has reached the halls of the parliament, prompting Independent Senator Nick Xenophon to call for a probe on the matter.

While giant retailers Coles and Woolworths are in the middle of a bout to lure more customers, their pricing tiff forced the slashing of milk price to as low as $1 per litre but dairy farmers were not amused.

The dairy industry claims that while the rivalry between giant retailers are delivering benefits to consumers through lower prices of dairy products such as milk and butter, they argued that over the long haul and as the industry started absorbing losses from lower revenues, many producers would eventually fold up, cut short the supply and send up the prices.

The issue was also taken up by the Coalition, who called the attention of the Australian Competition and Consumer Commission (ACCC) to enter the picture and save the dairy farmers from threats of bankruptcy.

In a statement issued on Thursday, Senator Xenophon said that while he acknowledged that consumers draw immense benefits from cheap dairy products, a deeper look into the matter is warranted as he argued that "if cheap milk in the short term means the destruction of our dairy industry in the long term, ultimately consumers will suffer."

Senator Xenophon said that his proposed inquiry should commence by the second week of March.

Also, opposition agriculture spokesman John Cobb said that immediate action is needed to be made soon as he stressed that Coles executives "were quite happy to get their bonuses over the dead bodies of farmers."

On the other hand, while Greens Senator Christine Milne views the inquiry as beneficial for the concerns of the dairy farmers, she also warned that the Senate runs the risk of compromising the integrity of the parliament if the probe amounts to nothing.

Senator Milne stressed the importance of ensuring that "Australia's dairy farmers saw something being done to protect their livelihoods."