Federal police are investigating how a proposal for Australia's digital spy agency to be given new powers to spy on citizens at home was leaked to the media.
News Corp had reported letters between the heads of the Home Affairs and Defence departments allowing the Australian Signals Directorate's (ASD) cyber sleuths to monitor Australian citizens.
But Defence secretary Greg Moriarty, Home Affairs secretary Mike Pezzullo and ASD director Mike Burgess released a joint statement on Sunday rejecting the report.
They said there was no proposal to increase the ASD's powers to collect intelligence on Australians or to covertly access their private data.
Shadow attorney-general Mark Dreyfus called on the prime minister to establish an investigation into how such sensitive information was able to find its way into the news.
"The documents described in the media appear to be extremely sensitive and divulge information about one of Australia's key security agencies," he wrote in a letter to Mr Turnbull.
"I am deeply concerned that this national security leak is potentially a result of political tensions and divisions inside your government over portfolio responsibilities - the nature of which are widely known."
Foreign Minister Julie Bishop said it was being looked into.
"Any leak from government is concerning and I understand that the Australian Federal Police is investigating," she told ABC radio on Monday.
The reports had suggested Defence Minister Marise Payne and Home Affairs Minister Peter Dutton would have had the powers to tick off on orders, without the attorney-general knowing.
Ms Bishop insisted no there was no plan to increase the powers of the directorate.