The group has written an open letter to Attorney-General Philip Ruddock, calling for expanded powers for the commission.
They say while Commissioner Terence Cole can make findings about whether ministers and officials knew of wheat exporter AWB's kickbacks to Iraq, he can only use those findings to report on breaches of the law by AWB and other companies.
"The commission is not empowered to determine possible unlawful conduct by the Australian government," the letter says.
"Until the commission is given expanded powers, Australia's role in any secret and unlawful financing of Saddam Hussein's Iraq will remain unclear."
The letter was signed by 21 lawyers and academics, including Emeritus Professor Tony Blackshield of Macquarie University, Professor David Kinley of Sydney University, and NSW Council for Civil Liberties head Philip Boulten SC.
Opposition Leader Kim Beazley on Thursday renewed his call for the commission's terms of reference to be expanded.
But Prime Minister John Howard, who gave evidence to the inquiry on Thursday morning, said his appearance before the commission shows how open and accountable the government is being.
Trade Minister Mark Vaile and Foreign Minister Alexander Downer have also appeared before the inquiry.
The Cole commission is investigating almost $300 million in kickbacks paid by wheat exporter AWB to the Iraqi regime under the United Nations' corrupt oil-for-food program.
The Australian Democrats said it is time the government accepted responsibility for the scandal.
"The insistence by government ministers and officers that they couldn't or shouldn't have done anything differently not only defies belief, it means there will be no changes made to the way this government operates that will give anyone any confidence that the same thing won't happen again," Democrats deputy leader Andrew Bartlett said in a statement.
"The simple fact is that, whatever AWB may have done, the federal government had the legal responsibility to ensure Australian companies did not breach international sanctions."