Some "perpetrators are being allowed to roam free in this country without any fear," said former deputy prosecutor at the United Nations War Crimes Tribunal at The Hague, Graham Blewitt.
He told ABC radio that Australia has developed that reputation amongst those who have been involved in war crimes, "and frankly that is a reputation that Australia should not be prepared to wear".
His comments come in response to revelations by a Sydney newspaper that a former bodyguard to Saddam Hussein has been given temporary residence here after arriving on a boat in 1999, and lives in Adelaide with his wife, an Australian doctor.
Oday Adnan Al Tekriti, 38, was initially refused a visa after arriving in Australia six years ago as immigration officials found serious reasons to believe he had committed crimes against humanity, however the refusal was overturned.
Australian Prime Minister defended the immigration department, saying its initial decision had been overturned by the independent Administrative Appeals Tribunal and not the department itself.
The federal opposition has called for a royal commission into the affair, saying the immigration department is a "turnstile of incompetence".
Labor Leader Kim Beazley said the scandal reveals that immigration officials clearly don't know who is coming or going.
Earlier, the party's immigration spokesman Tony Burke said Mr Al Tekriti's visa shows that the department is broken.
He called on the government to release the full decision by the AAT on Mr Al Tekriti's case.
"Given the prime minister's statements in support of a transparent system will the (immigration) minister make the full AAT decision publicly available?" he asked in parliament.
"Does the minister agree that if Australians are being kicked out of Australia while suspected war criminals are being welcomed in and having their pasts kept secret, hasn't our immigration system completely collapsed?" he said.
Mr Howard said he is concerned about the report that appeared in the Sydney Morning Herald, and said he has asked Immigration Minister Amanda Vanstone to explain Mr Al Tekriti's case and whether there are any further options open to the government.
Mr Blewitt said there have been previous instances when Canberra has allowed people into the country because of the potential they might provide Australian authorities with valuable intelligence information.
He said he has enough anecdotal evidence to suggest there are mass murderers, torturers and other criminals living in Australia.
"There are some nasty people out there," he said.
"They put on a cloak of respectability when they get here and just subsume themselves into the Australian way of life. We shouldn't allow that to happen."
The Sydney Morning Herald said as many as 30 war criminals from Sri Lanka, Lebanon, Nepal, Sierra Leone, Afghanistan, Iraq, Turkey and India have been investigated by Australian immigration officials in the past decade.
While their asylum requests were rejected, they lived in Australia freely until their appeals were heard.