A string of senior Australian ministers on Wednesday refused to confirm reports that a "nest" of Indian spies had been uncovered in the country and expelled, allegations that threaten to damage a burgeoning alliance.

Australia's prime minister, and foreign, defence and treasury ministers all dodged questions about allegations that Indian spooks tried to steal defence secrets and monitor expatriate communities in 2020.

Prime Minister Anthony Albanese said he would not comment on intelligence matters, after public broadcaster ABC broke the news citing unnamed "national security and government figures".

Intelligence bosses revealed in 2021 that they had rumbled a "nest of spies" sent to Australia to steal defence secrets and monitor their country's expats.

Although the foreign spies were kicked out of the country at the time, Australian officials have long refused to say who they were working for.

Local media are now claiming to have solved the mystery, with ABC alleging they were intelligence operatives dispatched from India.

The revelations are politically awkward for Canberra, given the growing security relationship between India and Australia.

Alongside the United States and Japan, they are members of the Quad security partnership.

Albanese wooed Indian Prime Minister Narendra Modi during a visit to Australia last year, referring to him as the "boss" during a massive rally of Indian-Australians.

Like many Western capitals, Canberra has chosen to play down concerns about the sectarian policies and democratic backsliding of Modi's Hindu-nationalist government, in favour of developing trade and defence ties.

Relations between India and Canada cratered after Prime Minister Justin Trudeau publicly linked Indian intelligence to the killing of a Canadian citizen, a Sikh separatist, on Canadian soil.

New Delhi called the allegations "absurd".

Australian Foreign Minister Penny Wong refused to comment on "intelligence matters", although she said it was crucial to "assert the importance of our democratic principles".

Wong said Australia would "maintain the resilience of our democracy, including in the face of any suggestion of foreign interference".

"And we have laws to deal with that," she added.

Treasurer Jim Chalmers said it was "not something I'm prepared to go into" - but stressed Australia had a "good relationship with India".

Top spymaster Mike Burgess has previously accused the spies of trying to cultivate politicians, police and embassy staff.

"They tried to obtain classified information about Australia's trade relationships," he said in 2021, without naming their nationality.

"They asked a public servant to provide information on security protocols at a major airport."

The Indian High Commission did not respond to a request for comment. (AFP)