Mr Smith denied an Australian media report claiming Canberra would drop plans to take the whaling issue to international courts because New Zealand had discovered 'significant difficulties' with the approach.

'We are looking at the possibility of international legal action, we are considering that as one of our options,' Mr Smith told reporters while on an official trip to Tokyo, according to a transcript released by his office.

Australia sent a customs vessel to track Japanese whalers in Antarctic waters this year and gather evidence for a possible legal case.

However, there has not yet been any announcement on whether a case would proceed.

'We'll make a decision about the need for legal action in due course at a time of our own choosing,' Mr Smith said. 'But we are very keen to exhaust diplomatic measures to try and bring this matter to a conclusion.' Mr Smith also said reports that New Zealand had scrapped plans for legal action were inaccurate.

'I know that it's been reported in that way, but my understanding of the New Zealand position is that the New Zealand government reserves the right to pursue legal options if diplomatic means fail,' he said.

Any legal action is likely to take place in either the UN International Court of Justice in The Hague or the International Tribunal for the Law of the Sea in Hamburg.

The Southern Ocean Whale Sanctuary was proclaimed by the International Whaling Commission in 1994, but Japan uses a loophole allowing whaling for scientific purposes to kill hundreds of the ocean giants every year.

Australia has taken a leading role in opposing Japan's use of the loophole. -- AFP