In an application to the ACT Environmental Protection Authority, the spy agency says it wants 660,000 litres of diesel stored on the Constitution Avenue site to run back-up generators.

Local residents are concerned about the massive store and angry about a lack of consultation. Meanwhile, one of Australia's leading researchers on hydrocarbons such as diesel said nearby residents should be briefed about the proposal and shown detailed plans of how the fuel will be stored.

ASIO referred all questions about the building to the Department of Finance and in an emailed statement a spokeswoman said the diesel would allow for the operation of the building's standby generators in the event of the loss of mains power.

''There is inbuilt monitoring within the tank system to identify any leakage before it penetrates the surrounding soil and in accordance with current legislation, ground water monitoring is also provided in the vicinity of the tanks,'' she said.

But the director of the Cooperative Research Centre for Contamination Assessment at the University of South Australia, Professor Ravi Naidu, warned a fire at the site would burn for days and release dangerous biproducts such s dioxins into the air.

The Mitchell blaze which burned for more than 24 hours and left a thick plume of smoke across the city burnt about 200,000 litres of hydrocarbon.

''660,000 litres is a lot of hydrocarbon - it would burn for along time and would produce a lot of toxic fume,'' Professor Naidu said.

He said it could provide power to a building for a number of weeks.

''It's a huge amount of chemicals … you have to assure people that it's not going to leak, if you have rises in temperature or seismic tremors … because if it leaks it will infect ground water. It's a toxic substance so if it leaks into groundwater once it gets in its quite difficult and quite expensive to clean.''

But the Department of Finance said it was complying with all relevant laws.

''The risk of fire and explosion for diesel tanks located under the ground is very low. Appropriate design measures are incorporated into such storage facilities to effectively manage any risk.''

But Campbell residents Geoff and Carolyn Mongan said they first heard of the proposal when they were contacted by The Canberra Times.

''Consultation is a myth,'' Mr Mongan said. ''We hear often about the storage problems petrol stations have and it's not just a few thousand litres of fuel. I shudder to think what will happen with 600,000,'' he said.

Mrs Mongan said she was concerned about leaking vapor.

''There can be leaks when tanks are built close to large buildings,'' Mrs Mongan said.

''You don't know what sort of fire it would cause and what damage it might cause. That should really be spelt out for residents.''

Professor Naidu said long-term storage of diesel for emergencies was problematic.

''For diesel long-term storage you have to have additives to stop oxidation and to prevent any moisture from occurring in the tank, they would have to fill it right to the top.''

The EPA has 20 days to ask ASIO for more information after the end of the public notification period on April 20.