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Australia acknowledged on Thursday that it risked being used as a base for a September 11-style attack but demanded the United States corrects a public warning that it was also a possible target.

The government saw red last week when the US Homeland Security Department named Australia, Britain and Italy as a possible target for suicide airliner assaults by the al Qaeda network. The US was also named as a target. Australian Attorney-General Daryl Williams said intelligence indicated the country could be used as a base for an attack on the United States or elsewhere, but said the new US warning that it could be a target was "not an accurate reflection of the intelligence".

He was speaking on the sidelines of a 2003 Homeland Security Conference.

Williams said US authorities had promised Australia a correction to the advisory that warned the airline industry that al Qaeda was planning new suicide hijackings and bombings.

But the retraction comes at a potentially embarrassing time, with Washington already under fire for the accuracy of its intelligence.

Williams played down suggestions the new warning would undermine the public's confidence in intelligence gathered by either the Australian or US governments.

Australia, which sent about 2,000 military personnel to fight in Iraq alongside US and British troops, is holding an inquiry into prewar intelligence later this year.

The head of Australia's main spy agency, the Australian Security Intelligence Organisation (ASIO), said the including of Australia in the Homeland Security list was a "bureaucratic mistake" because of someone misreading intelligence.

"It is important the particular advisory you are putting out accurately reflects the intelligence on which is based," ASIO's Director General Dennis Richardson told reporters.

ASIO briefed Australia's aviation industry last week on the new reported threats, but Williams said there was no need for Australia to increase its medium-level security alert as the fact civil aviation was mentioned was nothing new.

Australia has already boosted aviation security, putting armed guards on some domestic planes and seeking to extend this to some international flights and upgrading passenger screening.

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