Australia's federal government has revealed plans to draw up a list of sensitive "red flag" assets which could be off-limits to foreign investors or may involve extra vetting before sales proceed.

The list will be compiled by a new agency, the Critical Infrastructure Centre, which will assess ports, power stations and other major assets to consider threats such as sabotage or espionage.

The move follows recent concerns over investments in major infrastructure and property assets by Chinese companies.

The new centre will help to vet bids by examining security risks and providing advice to regulators. It will reportedly include officials from the Australian Security Intelligence Organisation, the domestic spy agency; the Australian Signals Directorate, a defence intelligence agency; and the Federal Treasury.

Attorney-General George Brandis and Treasurer Scott Morrison said in a joint statement yesterday that they wanted to promote foreign investment but such deals involve a growing range of risks.

Citing trends such as increased privatisation and outsourcing, they noted "national critical infrastructure is more exposed than ever to sabotage, espionage and coercion".

"The centre will develop… risk assessments and advice to support government decision making on investment transactions," they added.

"It will also provide greater certainty and clarity to investors and industry on the types of assets that will attract national security scrutiny."

The decision to develop advance risk assessments for significant assets follows a recent series of controversial moves to block deals involving Chinese bidders.

Last year, Canberra blocked bids by companies from Hong Kong and mainland China for electricity company Ausgrid, on national security grounds.

Canberra also blocked bids by Chinese investors to buy S. Kidman & Co, an Australian company whose pastoral leases covered more than 1 per cent of the nation's land.

The decisions caused anger in Beijing at a time when Chinese investment in Australia has been soaring.

Separately, Australia allowed the lease of a port in the northern city of Darwin to a Chinese company.

But the move caused concerns in Washington because the port is near a military base through which US Marines have been rotating.

These decisions have prompted calls for Canberra to provide greater transparency and consistency around its intervention in deals involving sensitive assets.

Aside from concerns about protectionism, critics noted that companies can spend large amounts of time and money preparing offers only to learn that their bids were deemed ineligible.

The Australian government has already tightened foreign investment rules, including requiring compulsory vetting of all investments of more than A$250 million (S$269 million) in assets owned by states and territories.

The announcement yesterday appeared designed to avoid embarrassing last-minute decisions to block foreign bidders.

The government said a new assets register will assess "critical infrastructure ownership in high-risk sectors across the country".

It is understood that the register is unlikely to be made public but will guide the Foreign Investment Review Board, a government agency that assesses large asset sales.

According to a report in The Australian newspaper yesterday, the register will be used to "raise red flags for national security scrutiny of foreign bids".

A source told the newspaper the register was already being drawn up and will involve "actual physical assessments of infrastructure".

Canberra insisted that vetting of foreign investments will still proceed on a "case-by-case basis". But the new centre will help to provide advance warning to investors and regulators over any security concerns that may affect deals.

"While the centre's initial focus will be on the most critical assets in our electricity, water and ports sectors, the government will consult with states, territories, industry and investors to consider what other assets require attention," said the statement by Mr Brandis and Mr Morrison.

"The Australian government is committed to jobs and growth and maintaining strong foreign investment while ensuring our national security."