The Abbott Government has considered sending arms, ammunition and other needed military supplies directly to Kurdish fighters to help them beat back Islamic radicals.
The idea comes amid reports in Washington that Australia will be part of a coalition "air campaign" against Islamic fighters in northern Iraq and possibly Syria.
In question time yesterday, the Opposition produced a letter from Kurdish representatives in Sydney begging Australia to send arms to Kurdish Peshmerga fighters to help in their battle against the Islamic State.
Foreign Minister Julie Bishop said the letter did not have proper legal status but confirmed Cabinet had discussed sending weapons to the Kurds.
"The subject of the letter has been considered by our National Security Committee but the existence of the letter was indeed sent to our lawyers to determine its status because it is not from a sovereign government, nor from a credited diplomat in Canberra," she said. It is understood Ms Bishop is deeply cautious about sending weapons to Iraq.
There is an international arms embargo on Iraq and Australia chairs the United Nations sanctions committee.
It is believed rather than sending guns and ammunition, Australia is more likely to play a role in flying in munitions to the Peshmerga.
The New York Times reported the US was mobilising a broad coalition of allies for a potential military action in Iraq and Syria.
The nations likely to sign up include Australia, Britain, Jordan, Saudi Arabia, Turkey, Qatar and the United Arab Emirates.
Senior Australian Government officials are privately playing down any idea Australia could take part in strikes in Syria, saying Australia would focus on targeting IS fighters in northern Iraq.
Any air strikes in Syria would be much more dangerous because the regime in Syria had sophisticated anti-aircraft weapons and an air force.