Independent senator Jacqui Lambie wants a pre-emptive pardon for any serving soldier accused of war crimes against the Taliban or Islamic State.
But Defence Minister Marise Payne says Australia won't be stepping outside the international norms and conventions of armed conflict.
Defence has confirmed its inspector-general is conducting a secret inquiry into reports war crimes were committed by Australian special forces in Afghanistan.
Senator Payne acknowledged they were obviously serious matters and the government wanted to see the outcome of the inquiry.
She agreed Australia owed an extraordinary debt of gratitude to members of the armed forces who risked their lives.
Senator Lambie suggested that debt of gratitude could be best expressed by the government supporting a pre-emptive pardon.
Those ultimately responsible for any "so-called war crimes" which occurred while killing Taliban and IS fighters would be politicians who authorised the deployments.
"Would the minister agree that because of the Taliban and Islamic State fighters' sub-human behaviour and vile, disgustIng culture and ideology that they should be exempted from from any rules of war or international human rights," she asked.
Senator Payne said Australia operated within international norms and conventions applying to armed conflict.
"I would not step outside those in the context of any engagement," she said.
Senator Lambie also suggested that without a pardon, the secret war crimes investigation could push more veterans to take their own lives.
Army Chief Angus Campbell, who initiated the inquiry earlier in 2016, said it was likely to take some time to complete, possibly as long as two years.
That was prompted by "a range of rumours, hearsay stories, possibly exaggerations".
Each was of sufficient concern to himself and the commander of special operations, Major General Jeff Sengelman, that it was felt an independent and in-depth investigation was needed.
Lieutenant General Campbell said the allegations related to events "potentially over a number of years" and included operational and non-operational activities.
"I am being very particular not to make any loose characterisation of rumour, stories, issues that are under inquiry," he said.
Acting defence force chief Vice Admiral Ray Griggs denied it was a war crimes investigation.
"It is not. It is a scoping inquiry about the culture of special forces and every time we use this language, we are creating a situation where fewer and fewer people will be open during the course of the scoping inquiry," he said.
