The federal government says the involvement of any companies "likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law" presented too much of a risk.

Huawei has publicly argued it would never hand over Australian customer data to Chinese spy agencies but the government on Thursday announced no combination of technical security controls sufficiently mitigated the risk.

"While we are protected as far as possible by current security controls, the new network, with its increased complexity, would render these current protections ineffective in 5G," the government said in a statement.

Huawei Australia on Thursday continued to highlight its credentials, saying it has "safely & securely delivered wireless technology" in the country for almost 15 years.

"This is a [sic] extremely disappointing result for consumers," it tweeted. "Huawei is a world leader in 5G."

Acting Home Affairs Minister Scott Morrison said the government was committed to protecting vital 5G networks.

"The security of 5G networks will have fundamental implications for all Australians, as well as the security of critical infrastructure, over the next decade," he said in a statement.

The decision also affects ZTE Corp, a Chinese telecommunications equipment company that makes mobile devices sold in Australia through Telstra, Optus and others.

Australian Associated Press