AUSTRALIA'S nuclear safeguard agency has been accused of incompetence and providing false evidence to MPs who were assessing the merits of a proposed $1 billion uranium export deal with Russia.

Protest groups, which have been critical of the Australian Safeguards and Non-Proliferation Office (ASNO) for many years, celebrated recently when the joint parliamentary committee on treaties recommended against proceeding with the Russian deal.

The committee's majority report rebuffed most of ASNO's arguments in favour of a nuclear agreement, citing serious doubts about the checks and balances on Russia's nuclear facilities.

Friends of the Earth has lodged a complaint with the treaty committee about the evidence ASNO officials gave to the committee earlier this year and may ask Parliament's privileges committee to investigate.

The $1 billion uranium deal, forged by former prime minister John Howard and Russia's then-president Vladimir Putin in September last year, would have helped Russia realise its plan to build another 40 nuclear power plants by 2020. It already has 31.

Australia, with almost 30% of the world's uranium reserves, is the second-largest uranium producer after Canada.

In a major embarrassment to ASNO, the Labor-dominated committee rejected its assurances that Russia was taking steps to separate its civil and military sectors and that civil reactors would be inspected by International Atomic Energy Agency (IAEA) officials.

"While the committee notes ASNO's assurances, the committee also notes that … IAEA safeguards failed to discover the efforts of Iraq and Libya to develop nuclear weapons," the committee said.

It heard that the agency had not conducted safeguards inspections in Russia since 2001. "The supply of uranium to Russia should be contingent upon such inspections being carried out."

ASNO officials also told the committee that Russia had taken steps to secure its nuclear sites, but the committee said questions remained about the smuggling of nuclear material within Russia.

It recommended the Federal Government consult the US, Britain, the European Union, Canada and Japan on whether the theft of nuclear material in Russia had been addressed.

The committee also rejected ASNO's assurances that safeguards would prevent Australian uranium from being used in nuclear weapons. "The committee considers it is important to recognise that the material and capacity to produce nuclear power intrinsically involves the capacity to produce fissile material usable for nuclear weapons," it said.

Liberal committee members produced a dissenting report which backed ASNO's position.

Committee chairman Kelvin Thomson declined to criticise ASNO but told The Sunday Age that its evidence was "vigorously contested by non-government groups".

Anti-nuclear, environment and medical groups called on the Federal Government to reform ASNO, urging its removal from the Department of Foreign Affairs and Trade due to conflicts with the department's role in trade promotion.

Australian Conservation Foundation spokesman David Noonan said ASNO did not reflect the Rudd Government's policies on strengthening nuclear safeguards.

He said it was incompatible for the Government to be launching an international commission on non-proliferation and disarmament while a key government agency was proposing to sell uranium to Russia, which recently threatened to use nuclear weapons against Poland.

Friends of the Earth nuclear campaigner Jim Green recently wrote to the joint standing committee on treaties complaining about false statements made by ASNO and federal Coalition members. He said ASNO "falsely asserted" that IAEA safeguards would "ensure" Australian uranium was used only for peaceful purposes. But there was no requirement in the Howard-Putin deal for any IAEA inspections.

The president of the Medical Association for Prevention of War, Dr Sue Wareham, said ASNO's evidence was not credible.

ASNO's director-general, John Carlson, was unavailable for comment.