Far from being a security benefit, banning the burqa would likely inflame tensions and fuel extremist propaganda, according to an ASIO report.
The 2011 report, obtained by Fairfax Media, said that "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".
It said a move towards a ban was likely to have negative implications, "including increased tensions and distrust between communities, and providing further fuel for extremist propaganda, recruitment, and radicalisation efforts".
"The security implications of any such ban are likely to be predominantly, if not wholly, negative."
Liberals' Senator Cory Bernardi raised the suggestion of a ban in 2010, and Prime Minister Tony Abbott fuelled national debate on the issue last month when he admitted to finding the attire "confronting", declaring that he wished women wouldn't wear it.
Parliament officers later imposed a rule to segregate visitors in burqas in a glassed-off area, but the plan was scrapped when Mr Abbott opposed the idea following widespread criticism.
Federal cabinet ministers told Fairfax that ASIO had not revised its assessment since the report.
