A lawyer representing East Timor in its spying case against Australia has accused ASIO of raiding his home and office, seizing documents and "muzzling" a key whistleblower days before the case is due to begin.
Attorney-General George Brandis has confirmed the spy agency conducted raids in Canberra, and agents took documents and electronic media.
But Senator Brandis denied it was to impede the East Timor case that starts in The Hague on Thursday.
"The warrants were issued by me on the grounds that the documents contained intelligence related to security matters," he said in a statement.
"I have seen reports this evening containing allegations that the warrants were issued in order to affect or impede the current arbitration between Australia and Timor-Leste at The Hague. Those allegations are wrong.
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"I have instructed ASIO that the material taken into possession is not under any circumstances to be communicated to those conducting those proceedings on behalf of Australia."
The statement was issued on Tuesday night after lawyer Bernard Collaery told the ABC that people identifying themselves as Australian Security Intelligence Organisation (ASIO) agents raided his office and home in Canberra, taking electronic and paper files.
Mr Collaery is working for East Timor, which accuses the Australian Secret Intelligence Service (ASIS) of secretly recording East Timorese ministers and officials during delicate oil-and-gas negotiations in Dili in 2004 for the Timor Sea resources treaty.
East Timor is pursuing international arbitration in The Hague to have the 2006 treaty overturned.
Speaking from Amsterdam later on Tuesday, Mr Collaery said a former Australian ASIS employee who had direct knowledge of an operation to bug East Timorese politicians and had been slated to testify in The Hague had been questioned and had his passport seized.
"This witness was the director of all technical operations at ASIS. We're not talking about some disaffected spy," Mr Collaery said.
"Muzzling the oral evidence of the prime witness is so crass."
He has called for a full inquiry and for the conduct of David Irvine - the current ASIO director-general, who was head of ASIS in 2004 - to be closely scrutinised.
"What it requires is a full judicial inquiry into the conduct of ASIS in this matter," Mr Collaery said.
Father Frank Brennan, a professor of law at the Australian Catholic University, told the ABC the case in The Hague was to begin on Thursday with the parties determining how to deal with the witnesses, particularly the key whistleblower.
"The allegation of the Timorese being that this whistleblower is able to provide credible, direct evidence of the bugging of the cabinet room, and that that was done for commercial gain and would require the approval not only of the director-general of intelligence but of the requisite Australian minister," he told the ABC.
The 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) equally divides spoils from the vast oil and gas assets found in waters between the two countries.
