ASIO has found there is no valid security reason to ban the burqa.
In a confidential report, the agency says the only security consequences of banning the burqa would likely be "predominately, if not wholly, negative".
The report by the Australian Security Intelligence Organisation, obtained by Fairfax Media, concluded: "Any move in this direction would likely have negative implications, including increased tensions and distrust between communities, and providing further fuel for extremist propaganda, recruitment, and radicalisation efforts."
The analytical report, dated February 8, 2011, was circulated to all State and Federal police forces and key government departments including the Department of the Prime Minister and Cabinet.
Federal cabinet ministers who are informed about ASIO's work told Fairfax Media the agency had not revised its assessment.
The idea of a ban in Australia has found support from several members of the NSW and federal parliaments since it was first raised by the Liberals' Senator Cory Bernardi in 2010.
The ASIO assessment finds no basis for any ban on security grounds: "While the burqa can be used to conceal the identity of an individual or material carried on the body, this is also true of other items of headwear and clothing.
"The burqa does not represent an additional, special security threat in this regard."
The Prime Minister four weeks ago said he found it "a fairly confronting form of attire". He said "frankly I wish it weren't worn," but that it was a free country.
Parliament's presiding officers then announced an interim decision that visitors in burqas be segregated in a glassed-in gallery.
After widespread criticism, Mr Abbott then publicly opposed the idea and the parliament's presiding officers scrapped the idea.
Mr Abbott has refrained from further comment since.
A ban on wearing the burqa anywhere in public is currently being advanced by a senator of the Palmer United Party, Jacquie Lambie, who is proposing a law to ban any full face covering in public "without reasonable excuse".
The ASIO report says that proposals for a ban had, to date, produced "only a few, non-violent protests". It warns, however, that "this could change if there was any real prospect of a ban on, or regulation of, the wearing of Islamic attire being implemented here".
Other unintended consequences could include burqa-wearing women being restricted to the home and socially isolated, according to ASIO.
A ban might also provoke women who don't normally wear a burqa to take up the practice "as a sign of defiance and Islamic identity".
One potential effect that ASIO does not mention was, however, stated privately by a minister in the Abbott government.
He said that ASIO was worried that, by alienating the Muslim community, any move towards banning Islamic attire could cut off the agency's best sources in the community.
Senator Lambie's draft bill stipulates that religious belief would not be a reasonable excuse. The proposal does not have the support of either major party.
Cory Bernardi appears to have eased in his campaign for a burqa ban. Politics was about bringing the public with you, he said this week, but that "my assessment is we're not at that point yet".
Senator Bernardi should not expect the support of the agency charged with counter-terrorism intelligence: "The security implications of any such ban are likely to be predominantly, if not wholly, negative," ASIO concluded.
