ROME (AFP) - French President Emmanuel Macron on Sunday (Oct 31) said Australia's prime minister outright lied to him over a cancelled submarine deal, deepening an already fraught diplomatic crisis.

"I don't think. I know," Macron said when asked by Australian media if Scott Morrison was untruthful in their private dealings.

"I have a lot of respect and a lot of friendship for your people. I just say when we have respect, you have to be true and you have to behave in line, and consistently, with this value."

Both leaders are attending the G-20 in Rome and a major UN-backed climate summit in Glasgow, but the weeks-long spat continues to trail them.

In September, Australia's leader without warning tore up a decade-old multi-billion-dollar contract with France to build a new fleet of submarines.

At the same time, Morrison revealed he had been in secret talks to acquire US or British nuclear subs.

Furious, Paris denounced the decision as a "stab in the back" and recalled its ambassador, who is only now getting back to work Down Under.

Australian media asked Macron on the sidelines of the G-20 summit whether he thought the Australian leader had been untruthful to him in private meetings.

Macron crossed paths with Morrison at the G-20, and spoke on the phone earlier this week, telling him that a "relationship of trust" had been broken between France and Australia.

The pair are yet to sit down for formal talks, although the French ambassador is set to meet Australia's foreign minister in Sydney on Monday.

In Rome, the French leader seemed to have made more progress in clearing the air with US President Joe Biden.

On Friday, Biden admitted to his French counterpart that Washington had been "clumsy" in the way it handled the deal, and said, "We have no better ally than France."

Morrison on Sunday defended his behaviour, refuting Macron's view and denying that he lied to the French leader at a private meeting in June.

"I don't agree with that," he said. "It's not true." "We had dinner together. As I've said on numerous occasions, I explained very clearly that the conventional submarine option was not going to meet Australia's interests," Morrison said.

"I'm quite conscious of the disappointment that's there. And I'm not surprised - it was a significant contract. And so I'm not surprised about the level of disappointment."

Australian Deputy Prime Minister Barnaby Joyce urged France to view the matter in perspective.

"We didn't steal an island, we didn't deface the Eiffel Tower. It was a contract," Joyce told reporters in Moree, 644 km northwest of Sydney.

"Contracts have terms and conditions, and one of those terms and conditions and propositions is that you might get out of the contract."