ASIO says it was aware and "has been actively investigating" allegations that a Melbourne car dealer was cultivated by the Chinese government in a bid to infiltrate Australia's parliament.
Nine's 60 Minutes program aired the claims on Sunday, citing sources with knowledge of the plot, where Melbourne car dealer "Nick" Zhao, 32, was allegedly cultivated by Beijing to run as a Liberal Party candidate.
Mr Zhao allegedly told ASIO about the deal. He was then reportedly found dead in a Melbourne hotel room in March.
The revelations came as Parliament returned for its final sitting fortnight of the year with politicians sharing their concern over the allegations.
Senate leader Mathias Cormann labelled the report "very serious" but said it was important not to get ahead of investigations by security agencies.
"Right now it's important that we don't get ahead of ourselves some allegations have been aired in the media," he said.
"We take them very seriously as a Government and ASIO indeed has confirmed through a statement by the director General that they've been made aware."
The statement released by ASIO director-general Mike Burgess said foreign interference remained an ongoing threat.
"Australians can be reassured that ASIO was previously aware of matters that were reported today, and has been actively investigating them," he said.
"Hostile foreign intelligence activity continues to pose a real threat to our nation and its security.
"ASIO will continue to confront and counter foreign interference and espionage in Australia."
Labor deputy leader Richard Marles said these matters "obviously are difficult" in the context of the relationship between China and Australia.
"The fact that ASIO has made a very rare statement today adds to the seriousness of these allegations," he said.
"[But] the relationship remains a fundamentally important relationship to Australia."
Nationals MP Barnaby Joyce said Australia must conduct an investigation into "exactly what's going on" raising concerns over the potential for ongoing espionage.
"We have to be on the balls of our toes, I don't ever think there’s only going to be one instance of this," he said.
"I think Australia as a nation has to realise that sort of naivety is the path to greater exploitation and a greater interference."
Federal Liberal backbencher Andrew Hastie says he was briefed on Mr Zhao's death as chair of the parliamentary committee on intelligence and security.
"It was surreal, it was like something out of a spy novel happening in Melbourne with impunity," he told Nine.
Mr Hastie says Australians should be "very concerned" about the alleged plot.
Committee chair Andrew Hastie reacts during a hearing of parliamentary intelligence and security committee at Parliament House in Canberra. Source: AAP
"This isn't just cash in a bag, given for favours, this is a state-sponsored attempt to infiltrate our parliament," he said.
"Using an Australian citizen and basically run them as an agent of foreign influence in our democratic system. So this is really significant and Australians should be very, very concerned about this."
It is the second explosive allegation on the weekend of attempts by the Chinese government to influence Australian politics.
Nine newspapers reported on Saturday that a Chinese spy, Wang "William" Liqiang, provided ASIO with details of how China's senior military intelligence officers fund and conduct political interference operations in Hong Kong, Taiwan and Australia.
"I have personally been involved and participated in a series of espionage activities," Mr Wang said in a statement to ASIO in October cited by Nine.
